Hungary remains adamant against ‘job-killing’ tax

Hungary remains opposed to a global minimum corporate tax rate, the country’s Prime Minister Viktor Orban said in an interview on Friday, citing concern over jobs in the central European country, which has used its low taxes to attract investment.

The minimum tax is the second of a two-pillar deal reached last year among nearly 140 countries to rewrite the rules of cross-border taxation to take better account of how big internet companies can book profits in low-tax countries.

A global drive for a minimum corporate tax rate is facing resistance in Hungary and the U.S. Congress https://t.co/upUicKlCRJ

— The Wall Street Journal (@WSJ) June 26, 2022

The Hungarian loophole

Hungary has used its 9 percent corporate tax rate and generous government subsidies to attract major investments by German carmakers and Asian battery manufacturers to bolster its export-driven economy.

“This is a job-killing tax hike, which, if implemented with Hungary's approval, would wipe out tens of thousands of jobs,” Orban said. “The tax issue is not a global one, it falls under national jurisdiction,” he added.

A bargaining chip

Hungary has argued that approval of the plan could harm the regional economy, but some European officials have suggested Budapest is using its opposition as a bargaining chip to gain access to billions of blocked EU recovery funds.

The European Commission approved on Wednesday Hungary’s post-pandemic recovery plan but said it would not receive any payments - worth a total EUR 5.8 billion - until it implements reforms imposed by the EU.

Orban said Hungary’s economy, hit hard by the war in neighbouring Ukraine, could grow by 1.5 percent next year, adding that his government would continue efforts to shield households from soaring energy costs in 2023.