Orbán first objects, then accepts global minimum tax proposal

One major goals of the Biden administration was to overhaul international tax rules and establish a 15 percent global minimum tax.  The US wanted to reverse a decades-long race to the bottom of corporate tax rates after many major corporations shifted headquarters and profits to low-tax jurisdictions, depriving countries of much needed tax money to build new infrastructure, support education and combat health crises.

The new minimum tax rate will apply to companies with annual revenue of more than 750 million euros ($866 million), and would to generate around $150 billion in additional global tax revenue per year.

Hungary was one of the holdouts, Orbán stated theatrically that Hungary was not willing to sign the agreement.  His country currently offers a 9 percent corporate tax rate to lure investment to Hungary.  The country’s propaganda machine thundered that the “global corporate tax proposal is unfair to Eastern Europe.”

Finance ministry State Secretary András Tállai declared that “Hungary will resist any attempt to adopt any global minimum tax rate… We simply cannot support tax increases, not even if the plan is backed by influential voices.”

Pro-Orbán media explained that Hungary will never give up its right to set tax policy, it is a question of economic sovereignty. The adoption of a global minimum tax would serve the interests of “certain global economic powers” that are being challenged by countries with low tax rates and transparent regulations.

On October 6 it took a 15-minute side-meeting in Paris with US Secretary of State Anthony Blinken to convince Hungary’s Foreign Minister Péter Szijjártó to accept the global minimum tax proposal.

At the end Hungary got a better deal, a transition period of 10 years, rather than the five years originally proposed.

I have the feeling that at the meeting Szijjártó did not bring up one of Orbán’s favorite anti-US jab that the proposal would serve the interests of a “certain global economic power.”   Now Orbán’s propaganda machine will sell the deal at home as another victory of the Great Leader in defense of Hungary’s economy and Hungarian jobs.

György Lázár

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