In a joint statement on Friday, the finance ministers of Germany, France, Italy, Spain and the Netherlands pledged to introduce a minimum effective corporate tax rate of 15 percent in their countries “quickly”, adding that they wanted the new regime to be implemented until 2023. “We are ready to implement the global minimum effective tax in 2023 and by any possible legal means,” they said in a statement issued during Friday’s finance ministers’ meetings in Prague. The European Commission has proposed an EU directive to implement the minimum rate, which is part of the OECD’s landmark international agreement on company tax reached last year. The agreement aims to eliminate the use of tax havens by multinationals. But the rules have been blocked, first by Warsaw and more recently by Budapest. Warsaw has since withdrawn its objections. Changes to EU tax rules usually require unanimity between member states, but some capitals have called for the tax plan to be implemented through a process called “enhanced cooperation”, meaning other member states could go ahead without approval or involvement of Hungary. Bruno Le Maire, France’s finance minister, told reporters ahead of the meetings in Prague that enhanced cooperation is a way forward, but that “national options” must also be on the table. Germany said earlier this week that it was prepared to implement the measure unilaterally if an EU-wide agreement could not be reached. Christian Lindner, Germany’s finance minister, said on Friday that while Berlin strongly supported a European approach, it would use domestic law to enforce the tax regime if necessary. The joint statement of the five ministers did not explicitly mention enhanced cooperation. Some EU capitals are wary of trying to use the complex process in a tax matter, scarred by a failed attempt to use it to levy a financial transaction levy a decade ago. Valdis Dombrovskis, executive vice-president of the Commission, told reporters that his preferred solution remains an EU-wide solution. The five ministers said the introduction of the minimum rate was an important step towards “tax fairness”, adding in their statement: “If unanimity is not reached in the coming weeks, our governments are fully committed to keeping our commitment.” Hungary has vociferously defended its 9 percent corporate tax. Foreign Minister Péter Szijjártó said earlier this year that given the current economic downturn, the minimum tax would be a fatal blow to the European economy and expose Hungary to “extreme challenges”. However, many EU capitals see Hungary’s move as an attempt to create leverage in other conflicts with Brussels rather than on the merits of the tax proposal. Budapest is locked in a row with the EU over the rule of law and has yet to reach an agreement with the Commission to unlock its share of the bloc’s post-Covid-19 recovery fund. Budapest was willing to agree to the minimum corporate tax earlier this year, before withdrawing its support in June. Gergely Gulyás, Hungarian Prime Minister Viktor Orbán’s chief of staff, insisted on Thursday that the EU could not implement the measure if his country did not agree to it. Hungary’s finance ministry and government representatives could not immediately be reached for comment on Friday. Additional reporting by Marton Dunai in Budapest and Mary McDougall in London
