Polish obstruction of new minimum profit tax rate creates uncertainty

In October 2021, 136 countries signed a new tax agreement led by the Organization for Economic Development and Cooperation (OECD). For this agreement to be implemented in the EU, it will have to be introduced as EU legislation. Each EU country must vote in favour of the new legislation. Poland was the only country to vote against the agreement, blocking the proposal. Maarten de Wilde, Professor of Tax Law at Erasmus School of Law, explains to NOS what impact this Polish blockade could have.

The OECD agreement is based on two pillars: profit distribution rules for companies across countries (pillar 1) and a minimum profit tax rate of fifteen per cent (pillar 2). The current EU legislative proposal only concerns the second pillar. However, Poland wants both pillars to be incorporated into EU law at once. The tax proposal must be supported by all 27 EU countries in order to be accepted, which means that this Polish objection has a blocking effect.

The specific consequences of the Polish position are not yet clear, but De Wilde fears that it could complicate any implementation of this OECD agreement: “The momentum may now slip away. It is unclear what the next step will be. Poland now occupies a strong position. Profit redistribution plans are less advanced and more difficult to reach globally.”

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Click here for the entire NOS article (in Dutch).

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