EU member state finance ministers failed to reach unanimous agreement on the EU directive to implement the global minimum tax for large businesses when they met in Brussels on Tuesday (March 15).
The Global Minimum Tax is one of two pillars that together make up a broad international tax agreement that was agreed in October 2021 by more than 130 countries to provide a backstop to international tax competition.
As all EU member states have signed the tax agreement, the European Commission has presented a proposal for an EU directive to implement minimum tax uniformly across the EU.
The implementation of the global tax agreement is one of the priorities of the French Presidency of the Council of Ministers of the EU which lasts until the end of June 2022.
Some governments have left to convince themselves
However, despite French efforts to formulate a compromise, the governments of Sweden, Poland, Malta and Estonia have always expressed their concerns about the directive and have retained their support for the compromise, although the Minister Estonian Keit Pentus-Rosimannus said she was “very positive that a good solution can be found very soon”.
Swedish Finance Minister Mikael Damberg said “it is too early to agree on a general approach to the directive”, arguing that not all technical aspects had yet been resolved.
As tax issues need the unanimous support of member state governments to become EU law, each member state government can veto the directive, making it more difficult for French Finance Minister Bruno The Mayor who chaired the meeting.
Slightly frustrated, he reminded his fellow finance ministers that their countries had all accepted the international tax agreement last October and that the directive currently on the table was nothing more than the implementation of this agreement.
To reach a compromise, the French had proposed to delay the implementation of the directive by one year and to make voluntary the implementation of part of the global minimum tax for Member States which had only few companies affected by the directive during the first five years. years of implementation.
Several finance ministers, as well as the Commissioner for the Economy, Paolo Gentiloni, responsible for the directive on the side of the European Commission, criticized this deviation from the original text, but nevertheless supported the text, “in a spirit of compromise”.
For four finance ministers, that was not enough. Polish State Secretary Magdalena Rzeczkowska argued for a stronger legally binding link between the global minimum tax and the other pillar of the international tax agreement.
This other pillar of the agreement would allocate part of the taxes of large, highly profitable companies like Apple or Facebook to the places where their turnover is generated rather than where the head office is based.
However, the details of this agreement are still being worked out and will result in an international convention, which is why The Mayor and the Commission have argued that a legally binding link between the two pillars cannot be implemented. in the European directive in question.
three more weeks
Nevertheless, Le Maire seemed determined to bridge the remaining divisions between EU finance ministers. “We are working on formulations, no formulation is insurmountable,” he said.
“I learned patience,” he added, adding that he had been working on this file for five years now.
“If it takes three more weeks, it doesn’t matter,” he said, sounding confident he would reach a deal in early April the next time EU finance ministers would meet.
[Edited by Nathalie Weatherald]