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Industrial Policy

Poland vetoes EU tax reform again, dismisses ulterior motives

LUXEMBOURG — Poland may seem like the odd man out on global tax reform, but it has no hidden agenda in opposing the EU’s efforts to introduce a global minimum corporate levy of 15 percent, a top official told POLITICO.

Magdalena Rzeczkowska, Poland’s secretary of state and head of its national revenue administration, made the comments on Tuesday less than 30 minutes after vetoing an EU bill designed to implement the initiative, which G20 countries agreed on last fall in a wider bid to obliterate tax havens and ensure that tech giants pay their fair dues.

“No, this is just about tax,” Rzeczkowska said when questioned whether Warsaw was holding the initiative hostage due to rule-of-law disputes with the European Commission, which has taken Warsaw to court over its controversial disciplinary procedure for judges.

The EU’s highest court sided with the Commission and is fining Poland €1 million a day until it changes its ways. The EU’s executive arm is also holding back €36 billion in payouts from the bloc’s post-pandemic recovery fund until Poland falls in line.

“This is a completely separate issue,” she asserted.

Poland is now the only EU country standing in the way of the deal after previous holdouts — namely Estonia, Hungary, Malta and Sweden — had withdrawn their vetoes ahead of Tuesday for this month’s gathering of finance ministers, following minor changes to the bill. Tax initiatives in the EU require unanimous support to become law.

Warsaw says it’s not opposed to the minimum tax per se. But it frames the problem as an issue of linkage: The initiative is part of a two-pronged global project that includes a levy on the world’s 100 biggest companies (dubbed Pillar 1) that would then share the proceeds across the world. Without legal guarantees from the countries that signed up for Pillar 1 alongside the minimum corporate tax rate (Pillar 2), Poland says it will refuse to budge.

“We were convinced that digital giants have to be taxed, and splitting the two will not give an assurance that the whole package will happen,” Rzeczkowska said. Otherwise, “there are some risks to the level playing field, and there is a risk that investors, the companies, will go from poorer countries to the richer [ones.]”

Many treasury officials within the EU don’t buy Rzeczkowska’s reasoning and are convinced that Warsaw will only come on board once its dispute over the recovery fund payouts is sorted.

French Finance Minister Bruno Le Maire, who is chairing legislative negotiations on economic files as part of the EU’s six-month rotating presidency, is among the skeptics. But he refused to specify what he thinks Warsaw’s agenda is.

“There are mysteries that must be cleared by Warsaw,” Le Maire told reporters after the ministerial meeting. He had hoped for a swift agreement on Pillar 2 and made no effort to hide his frustration when Rzeczkowska stood firm in lonely opposition, despite calls from other ministers for European unity.

“We have addressed the preoccupation raised by Poland on the link between Pillar 1 and Pillar 2,” the Frenchman continued, referring to a statement that legislators attached to the bill that underlined the EU’s seriousness in introducing both pillars.

But that statement is no guarantee, in Rzeczkowska’s eyes.

“For us it is important that the date of entry into force of both solutions should be close to each other,” Rzeczkowska said, stressing that Europe cannot be the only jurisdiction to enforce the rules. Other countries around the world need to follow suit, she argued, adding: “If Europe stays first, it will be unequal.”

Paola Tamma and Giorgio Leali contributed reporting from Luxembourg and Paris.

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