Hungary proposes 10-year transition period for min corp tax rate
Image by Shutterstock.com
Hungary has proposed a 10-year transition period for the introduction of a global minimum corporate tax rate as well as the definition of exceptions, Minister of Foreign Affairs and Trade Péter Szijjártó said at an OECD meeting in Paris on Wednesday, state news wire MTI reports.
Hungary also wants labor costs and the value of assets necessary for companies' operation to be taken into account when the minimum corporate tax is calculated, Szijjártó said.
If the rest of the OECD members can accept this, then a compromise could be reached, clearing the way for the introduction of the global minimum corporate tax, while at the same time preventing a violation of Hungary's interests and any risk to the country's competitive economic advantage, he added.
Szijjártó noted that Hungary's 9% corporate tax rate is the lowest in Europe and gives the country a significant advantage in terms of investment incentives and workplace creation.
"That's why we'll only accept a proposal that doesn't put this advantage at risk," he said.
He said Hungary is "in full agreement" with the part of the OECD proposal that affects taxation of digital multinationals, but said the part concerning "companies undertaking genuine economic activity" is "more complicated".
Under the OECD's "Two–Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy", some taxing rights over multinationals would be re-allocated from their home countries to the markets where they have business activities and earn profits, regardless of whether firms have a physical presence there, while the second pillar would introduce a 15% minimum corporate profit tax.
In a post on Facebook on Wednesday, Szijjártó said he discussed the issue of the global minimum corporate tax with United States Secretary of State Antony Blinken in Paris.
He said Blinken signaled that the issue is one of "great importance" for the United States and would like to see an agreement reached.
"I said Hungary is prepared for compromise if we can agree on rules that don't harm the Hungarian economy or put Hungarian jobs at risk," Szijjártó said.
"On the basis of the talks in Paris today, I can see that there is some chance of achieving this," he added.
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.