Poland has blocked the minimum rate of income tax

Poland has blocked an EU agreement to introduce a minimum corporate tax rate of 15% for large multinational corporations. Poland was the only EU state to speak out against this decision at a meeting of European Union finance ministers. Thus, the agreement was rejected, all decisions in the EU are made only with the full consensus of the participating countries.

The agreement was aimed at preventing tax evasion by the largest companies with an annual turnover of more than 750 million euros. The agreement was part of a global plan to prevent understatement of tax payments. The plan proposed by US President Biden was first supported by the G136, then the GXNUMX, and then another XNUMX countries of the world. These countries have set a minimum tax rate to stop competition in attracting companies to their territory. Tax evasion by registering in jurisdictions with low tax rates has been extremely common around the world.

Poland blocked the deal because it wants the second part of the global plan to be introduced at the same time. We are talking about the distribution of income tax between states, for example, when registering a company in one country, and doing business in others.

The consequences of the Polish demarche are still unclear. A professor of tax law at the Erasmus Universiteit Rotterdam suggests that global momentum for a minimum corporate tax rate may be waning. The position of Poland is quite strong. However, plans to redistribute income taxes are less popular in the world, in particular because of the complexity of their implementation. What will happen next is difficult to predict.

Interestingly, in most EU countries, corporate income tax is either already 15%, or exceeds this bar. In Poland itself, the tax rate is 19%. A tax rate lower than the proposed one is currently in effect in Cyprus (12,5%), Ireland (12,5%), Bulgaria (10%) and Hungary (9%). In the Netherlands, corporate income tax is charged on a progressive scale: 15% up to 395 thousand euros and 25,5% above this amount.