The 27 member states of the European Union plan to start collecting a 15% minimum tax on the profits of large corporations starting in 2024. Poland and Hungary had delayed an agreement to do so but dropped their resistance Wednesday after making a deal that involved additional aid for Ukraine and the release of EU funds that had been held back from Hungary.
The EU’s move could provide a boost for a similar plan supported by Treasury Secretary Janet Yellen, who reached an agreement last year with the Organization for Economic Cooperation and Development and its 137 member nations to implement a global corporate minimum tax that targets the use and abuse of international tax havens.
That plan, however, needs to be approved by Congress, where there is plenty of opposition to the proposed minimum tax. “Prospects for U.S. implementation of the agreement … look even dimmer next year with Republicans taking control of the House of Representatives in January,” The Wall Street Journal’s Paul Hannon and Richard Rubin wrote Thursday.
In a letter to Yellen this week, the Republican members of the Senate Finance Committee and House Ways and Means Committee made it clear they have no intention of enacting the tax agreement. “For the past two years, the Biden Administration has routinely made commitments in the OECD negotiations it has no authority to fulfill,” they wrote. “Despite Treasury’s actions to date, it cannot dictate U.S. tax law or compel Congress to act.”
Meanwhile, U.S. companies are faced with a different, more limited minimum corporate tax that was included in the Inflation Reduction Act this past summer.