Parliament rejects EU directive on global minimum tax

Adopted with 118 votes in favour, 32 against and 6 abstentions, the resolution said parliament opposed the directive in view of the inflation and economic crisis caused by the war in Ukraine.

In its reasoning, parliament said that the EU directive would precede global regulations, with research on the matter lagging behind. Hungary also sees it as doubtful that domestic supplementary taxes would be recognised abroad, the resolution said.

During the parliamentary debate, state secretary Andras Tallai noted that the EU directive would require multinational companies operating in member states where the corporate tax is below 15 percent to pay the difference in their home countries. The aim is to stop companies from relocating to countries offering lower taxes, he said.

Tallai noted that the tax was originally proposed in the OECD, and aimed to tax digital multinational companies, which at the time paid “a fraction” of the taxes of other companies, he said. “Then it all changed course. Developed economies are now working to establish a minimum corporate tax,” he said.

The measure would eliminate tax competition, and would curb the development of countries like Hungary, he said.

The corporate tax rate is currently nine percent in Hungary.

The opposition Democratic Coalition said the resolution was protecting foreign companies. By rejecting it, the government sided with large multinational companies, lawmaker Ferenc David said.

Parbeszed said earlier they would not support the resolution.

Ruling Fidesz said in a statement after the vote that by supporting a 15 percent global minimum tax, the opposition had “made it clear they would double taxes on corporations”. “This would be a serious burden even in peacetime, let alone during war,” the statement said.

Hungary needs economic growth, tax cuts and investment support in the current situation, “the only way to protect jobs,” the statement said.