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Economy & Policy

Hungary could agree to a compromise on the global minimum tax

Hungary has the lowest tax burdens for individuals and entrepreneurs in Europe.

Minister of Foreign Affairs and Trade Péter Szijjártó said at a meeting of the Organization for Economic Co-operation and Development (OECD) in Paris on Wednesday that the Hungarian government will only support the introduction of a global minimum tax if it does not harm Hungarian interests.

According to MTI, the foreign minister reported that this is a particularly sensitive issue, as Hungary has the lowest tax burdens for individuals and entrepreneurs in Europe, and one of the foundations for the success of Hungarian economic policy was the introduction of flat taxes after 2010.

Szijjártó pointed out that the 9 percent corporate tax rate currently in force in Hungary is the lowest in Europe and gives Hungary a significant advantage in terms of encouraging investments and creating jobs. “Therefore, we can only accept a proposal that does not jeopardize this advantage,” he said.

The current OECD proposal has two parts. The first deals with the taxation of large digital companies that do not operate locally, and there is complete agreement on this. However, the second part is more complicated and applies to “companies engaged in real economic activity,” he said.

The minister said that the Hungarian government had proposed the introduction of a 10-year transition period with various exceptions defined; how labor costs and corporate assets are valued should also be taken into account when setting the minimum tax. If these are accepted by other countries, a compromise could be reached that allows for the introduction of a global minimum tax that does not harm Hungarian interests or jeopardize the competitive advantage of the Hungarian economy, he explained.

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