Nearly 140 countries agreed last year to impose a 15% minimum tax on large companies, paving the way for the most significant overhaul of international tax rules in a century. Getting to that point took years of negotiations that often seemed close to collapse. Now, eight months later, there has been little progress on changing national laws to implement the tax.
Hungary’s decision to withdraw its support for the minimum tax means that the European Union can’t press ahead with its plans for 2024 implementation, even though the bloc’s other 26 members support the move.
French President Emmanuel Macron spoke to Hungarian Prime Minister Viktor Orbán about the issue at a meeting of EU leaders Friday and later told reporters that the bloc’s other members would work to lift the veto, although he added that there were limits to what they were willing to do.
“We can engage reasonably but not beyond,” Mr. Macron said.
Sen. Rob Portman (R., Ohio) said EU delays should make the U.S. rethink its approach. The U.S. has a minimum tax of 10.5% on the foreign income of U.S.-based companies, and the Democratic plan would raise that rate and tighten its rules before other countries act.
There might be advantages to being the first country to implement the tax. According to the terms of the 2021 agreement, a country that enacts the measure can collect taxes on profits made by companies based in other jurisdictions to ensure the goal of 15% is reached if those other jurisdictions don’t collect the tax themselves.
Ms. Yellen, at a June 20 event, said she would be delighted to see the U.S. move first and added that the EU is “very close to achieving this.”
Eventually countries “that say we don’t want to go along with this, they’ll see their firms are being taxed anyhow and we’re not getting the benefits of that taxation,” Ms. Yellen said.