Global tax reform is gaining momentum as G20 supports new taxes

If there is no unanimous agreement among the EU members, the agreement will be broken. Setting a minimum tax requires an EU directive, and the directives require the support of all 28 EU states. Ireland has previously hinted that it would oppose or block any directive, and Hungary could prove an even bigger obstacle given its fraught relationship with the union, which has pressured Hungary on unrelated issues of rule of law and corruption.

Hungarian Prime Minister Viktor Orban has stated that taxation is a sovereign issue and recently described the proposed minimum global corporate tax as “ridiculous”. Hungary’s low corporate rate of 9 percent has helped attract major European manufacturers, especially German carmakers including Mercedes and Audi.

On Saturday, French Finance Minister Bruno Le Maire said it was important for Europe to support the proposal. He said the G20 countries plan to meet with Ireland, Hungary and Estonia next week to try to address their concerns.

“We will discuss this point next week with the three countries that still have some doubts,” he said. “I really think that the momentum that the G20 countries have provided is definitely a decisive factor and that this breakthrough should bring all the European countries together.”

Policymakers also still have to work out the exact price companies will pay, as the US and France seek to top the 15 per cent mark, and negotiations continue over which companies will be taxed and who will be excluded. The framework currently excludes companies in the financial services and extractive industries such as oil and gas, a cut that tax experts have suggested could open a huge loophole as companies try to redefine themselves to meet the requirements for exemptions.

Domestic politics can also pose obstacles for states that have agreed to join but need to turn that obligation into law, including in the United States, where Republican lawmakers have expressed their disapproval, saying the plan would harm American businesses. Major business interests are also warily eyeing the agreement and suggesting that they plan to fight anything that puts US companies at a disadvantage.

“The most important thing is to understand that if there is a deal, there can be no punitive deal toward American companies,” said Neil Bradley, chief policy officer at the US Chamber of Commerce. “This is of course a major concern.”