Poland, Sweden, Estonia, Malta block EU minimum corporate tax deal

10:50 pm Tuesday, March 15th, 2022

PARIS (Reuters) – Poland, Sweden, Estonia and Malta blocked on Tuesday a French-proposed compromise on how to implement minimum corporate tax across the European Union, dealing a blow to the global overhaul of cross-border tax rules.

As tax issues require unanimous backing in the 27-nation European Union, French Finance Minister Bruno Le Maire said that he would put the issue back on the table the next time ministers meet in April.

“Tax justice takes a long time but in the end it’s important that tax justice wins,” Le Maire told a meeting with top tax officials from EU countries.

After years of negotiations nearly 140 countries reached a two-track deal last October on a minimum tax rate of 15% on multinationals and agreed to make it harder for companies like Google, Amazon and Facebook to avoid tax by booking profits in low-tax jurisdictions.

France, which currently holds the EU’s rotating presidency, has been pushing for quick EU implementation of the overhaul of cross-border tax rules.

However, in the face of concerns from some EU countries that they would not be ready, France proposed a compromise that pushed back implementation of the new rules until the end of next year, rather than the beginning.

It also proposed a firm political commitment to not let the two pillars of the overhaul be separated, but Poland said that did not go far enough and it needed stronger legal assurances.

“Tax justice means both pillars are implemented together,” Polish revenue chief Magdalena Rzeczkowska told a meeting in Brussels, adding that Warsaw looked forward to a “more balanced” proposal.

Swedish, Estonian and Maltese officials also said that they could not sign on to the deal as it currently stands although Ireland and Hungary, which have had strong misgivings in the past, said they were satisfied.

The global tax reform is supposed to be brought onto countries’ lawbooks next year, although that has long been seen as highly ambitious in large part because the U.S. administration has struggled to push it through Congress.

(Reporting by Leigh Thomas; Editing by Mark Heinrich)