The European Union may also be shackled by the global minimum tax, after its introduction, the other leading economic powers of the world may gain an irreplaceable competitive advantage over the EU, Norbert Izer informed MTI.
The Secretary of State for Tax Affairs of the Ministry of Finance added: the state coffers of the European powers may initially benefit from the introduction of the minimum tax, but their companies will lose. Due to the peculiarity of the EU tax legislation, the minimum tax is a strict shackle here - emphasized Norbert Izer.
As he said: the OECD's proposal was modified at the last minute so that it would not cover parent companies for the time being, but the EU rules do not allow for this, so the minimum tax rules within the Union will be stricter than in the rest of the world.
In addition, many people are already thinking about what subsidies they could replace their previous tax benefits with; within the EU, however, these state subsidies are also subject to many more restrictions.
Thus, while, for example, an American or Chinese company group in the home country will still be able to receive significant tax benefits for R&D activities, among other things, in the home country, this will not be possible for a European company.
In the long term, the minimum tax will bring Europe a significant competitive disadvantage, a lag in development and ultimately a big drop in budget revenues, explained the state secretary.
Norbert Izer also touched on the fact that the profit tax, to which the global minimum tax applies, is only a fraction of the tax burden placed on businesses everywhere. A company has to pay several types of taxes, such as sales tax, various charges after wages, levies, and local tax.
Of these, the major powers have chosen only one, and moreover, they would raise the level of the type of tax that, according to public consensus, hinders growth the most, while not focusing on all the others. This is how the fight against harmful tax competition turns into a fight against the competitiveness of tax systems, stated the state secretary.
