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Government official: Global corporate tax rate could spell competitive disadvantage to EU

The introduction of a global minimum corporate tax rate, which the OECD accepted on Friday, could bring competitive disadvantage for the European Union, a government official said on Monday.

Hungary was among nine countries that did not join a statement backing the introduction of a global minimum corporate tax rate at a meeting of members of the Organisation for Economic Co-operation and Development’s Inclusive Framework on July 1.

At the meeting, 130 members of the framework joined the “Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy”, the finance ministry’s tax affairs state secretary told MTI. The first pillar, which Hungary “fully supported”, would re-allocate some taxing rights over multinationals from their home countries to the markets where they have business activities and earn profits, regardless of whether firms have a physical presence there, Norbert Izer said.

The second pillar would introduce a 15 percent minimum corporate profit tax.

Izer said Hungary was on board with the second pillar of the agreement “as long as it exclusively addresses artificial tax avoidance structures”. “In the case of profits generated from real economic activities … taxation is the sovereign right of every country, and no international organisation may intervene,” he said.

Izer said the nine dissenting countries were “really just the tip of the iceberg”. “Rather than speaking about the uniform support of 130 countries, it would be more accurate to say that there were that many that supported the proposal or that were not clearly against it,” he added.

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