Poland is set to lift its veto on the EU’s plans to implement a global corporate tax rate of 15 percent for multinational companies, three officials told POLITICO Wednesday.
Warsaw’s support should give the EU the unanimous support it needs to pass that tax initiative, which G20 leaders rubberstamped last fall together alongside a levy for the world’s 100 biggest companies.
Polish Finance Minister Magdalena Rzeczkowska is expected to sign off on the deal Friday when she and her peers meet for this month’s Ecofin meeting in Luxembourg. Although there are some concerns that Hungary could upset the celebrations.
Poland’s change of heart comes after its government settled a rule-of-law dispute with the European Commission that had left the country cut off from its share of the EU’s €800 billion recovery fund.
Rzeczkowska has dismissed accusations that she was holding the tax rate hostage over the dispute, saying that Poland instead wanted legal assurances that the global levy would follow the minimum tax rate.
It’s unclear whether EU countries have provided more assurances beyond a declaration of intent to implement both initiatives, which Poland had previously deemed insufficient. Hungary has privately raised similar concerns in recent days, the officials said, putting Brussels on edge.
Assuming ministers do announce the deal on Friday, policymakers will then look to the Organization for Economic Cooperation and Development, which is still developing the global levy. The two initiatives were part of the package deal for global tax reform that the G20 agreed to in late October.
OECD boss Mathias Cormann has already stated that the levy won’t be ready by year-end. That would delay the implementation timeline, which was earmarked for 2023.
“We deliberately set a very optimistic timeline for implementation to keep the pressure on and it has helped keep the momentum going,” Cormann said in Davos in May. “But I suspect it is probably most likely that we will end up with a practical implementation from 2024 onwards.”
That timeline would make it impossible for U.S. Treasury Secretary Janet Yellen to get both initiatives through Washington’s legislative machine before the midterm elections this fall.
EU officials are confident that Yellen will get the minimum tax rate through Washington but fear the worst for the global levy — which would hit digital giants like Amazon and Facebook — as Republicans are forecast to take control of the House and probably the Senate.