Lemerre told reporters in Paris that France would work on “alternatives” with EU Finance Commissioner Paolo Gentiloni to approve an agreement reached last year with 137 OECD countries so that other EU members could implement it. minimum tax without Hungary. His remarks underscore the frustration in Paris with the failure of legislation to implement the so-called OECD Pillar Two, which dictates a minimum real corporate tax rate of 15%. The ministers were on the verge of an agreement this month after Poland withdrew its opposition, but Hungary abruptly overturned its position and blocked the measure at the last minute. “Europe can no longer be held hostage to the ill will of some of its members,” Le Maire said, adding that France had fought for the international tax deal for the past five years and would not let it fall. “This global minimum tax will be implemented in the coming months with or without the agreement of Hungary.” Tax measures at EU level are subject to unanimous decision-making, but nine or more Member States can take initiatives through “enhanced cooperation” if not all capitals can be taken into account. The bloc has tried in the past to use enhanced co-operation to enforce a tax on financial transactions, but the effort has been successful. The idea of developing enhanced cooperation for the implementation of the corporate tax rate is considered to be the last resort in Brussels and the focus remains on Hungary’s approach. “This is exactly what we are focusing on right now: reaching a unanimous agreement,” said Commission spokesman Daniel Ferry. Some officials still expect Hungary to reach the minimum interest rate because the countries implementing the measure may impose additional charges on companies that benefit from a lower interest rate. Lemmer said on Thursday that the EU should embrace the majority on tax issues in the future. The OECD tax package also includes a first pillar that obliges large multinationals to declare profits and pay more taxes in the countries where they operate, rather than diverting their income to low-tax jurisdictions. The proposals also face headwinds in the US. Under former US President Donald Trump, Washington was not enthusiastic and resisted Lemmer’s efforts to promote it, while Joe Biden’s administration is struggling to persuade Congress to pass tax rules to implement both pillars of the agreement. France made the approval of the tax agreement one of the main goals of its six-month EU presidency, which ends on Thursday. Hungary’s suspension is not considered in Paris to have anything to do with the real tax provisions, but as a bargaining chip for other disputes between Brussels and Budapest. Lemerre said Hungary’s objections “have nothing to do with the minimum corporate tax”.
