Two more countries have expressed support for a global minimum tax, cutting the total number of holdouts down to just seven.
Peru and the Caribbean nation of St. Vincent and the Grenadines have now signed on to the global minimum tax agreement, joining 130 other countries, including the G-20, representing the world’s 20 largest economies. The two countries had not signed on to the plan when it was first announced earlier this month.
The two additional countries joined in recent days before the G-20 met in Venice, Italy, over the weekend to discuss a variety of pressing global issues, including the tax proposal, according to a list of countries published by the OECD and updated on Friday.
The other countries that have not agreed to the global minimum tax plan, which calls for a corporate tax rate of at least 15%, are Ireland, Hungary, Estonia, Kenya, Nigeria, Barbados, and Sri Lanka. Ireland, Hungary, and Estonia are among the most important countries that will need to sign on in order to implement the agreement, which, as of now, is only being discussed in broad strokes. The European Union will have to agree unanimously to the proposal for it to be implemented.
IRELAND HOLDING OUT AGAINST GLOBAL MINIMUM TAX AFTER YELLEN MEETS WITH FINANCE MINISTER
Hungary, which has a corporate tax rate of just 9%, appears the most stalwart in its opposition to the global tax agreement.
“Hungary rejects any initiative that would lead to tax increases and weaken competitiveness,” Hungarian Minister of Finance Mihaly Varga said according to a news release provided to the Washington Examiner by the Hungarian government.
Peter Szijjarto, the Hungarian minister of foreign affairs and trade, was even more forceful in his denunciation of the push for equal taxation. “Nobody has the right to intervene from abroad in Hungary’s tax policies,” he said after a May meeting with the secretary-general of the Organization for Economic Cooperation and Development.
Ireland and Estonia are a little softer in their approach.
In a statement provided to the Washington Examiner, the Estonian government said that while it is “firmly committed” to international measures to prevent tax avoidance and supports the international tax agenda, the proposal on the table “at times neglects to protect the interests of small open economies such as Estonia.”
“For 20 years now, Estonia’s distribution-based corporate income tax system (flat 20%) has helped us create growth and innovation friendly environment,” the statement read. “Estonia’s distribution tax system has been hailed as an optimal tax system that completely removes economic double taxation while delivering a healthy level of corporate tax revenue.”
A counselor for Cyber Issues and Economic Affairs at the Estonian Embassy in Washington, D.C., pointed out that the technical details of the OECD agreement still need to be discussed, and Estonia will be involved in negotiations.
Irish Finance Minister Paschal Donohoe met with U.S. Treasury Secretary Janet Yellen on Monday, but after the meeting, Ireland, which has a 12.5% corporate tax, was still not ready to commit to the plan, given its reservations.
“Minister Donohoe recalled the Irish position on the matter,” a spokesperson said, also pointing out that the meeting was “good and constructive.”
The Biden administration has praised the 132 countries that have approved of the deal and said that the agreement was historic. Yellen has repeatedly said that the plan would prevent what she dubs as a “race to the bottom” of countries competing for lower tax rates to lure businesses to their respective territories.
“The international tax deal protects the free, open economic order that is crucial for investment and growth,” she said at a press conference after the G-20 meeting. “And at the same time, it is welcome news for middle and working-class people around the world and, I think, especially for the American people.”
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There is still a long way to go before a global minimum tax would be effective, as the agreement is more of a framework than a working plan. Lawmakers in the individual countries will also have to greenlight the tax proposal. The OECD is hoping to see implementation in 2023.
