MEPs cautious on proposal to raise multinationals minimum EU tax to 21%

MEPs from the committee for economic and monetary affairs debated a draft proposal for a minimum EU tax for multinationals, which amends a two-pillar solution by the European Commission for the OECD deal on a global minimum tax.

Pillar two is the so-called ‘Global Anti-Base Erosion’ (GloBE) rule, which is designed to ensure that large multinationals must pay a minimum level of tax of 15% on the income arising in each jurisdiction where they operate.

The ECON committee will be voting on French MEP Aurore Lalucq’s (S&D) proposal to amend the EC draft, which includes lowering the threshold for what is considered “low-taxed” to anything below 21%, instead of the Commission’s 15%.

Other amendments enshrine oversight, review and monitoring of these changes if the measures are to be adopted and transposed into member state law.

The parliament draft also reduces the exemption on domestic companies for the transitory period from 5 to 3 years.

“The line that I wanted to adopt is that it is a matter of sending a signal of responsibility: this is a fine-tuned agreement, and we don’t want to tamper with it and suggest major changes. But since it is an opinion, we can propose a certain number of political signals, to put the focus on certain particular points that call for particular vigilance.”

Lalucq calle for flexibility on tax rate and thresholds. But despite the apparent discord within the committee, Lalucq said that herself and other shadow rapporteurs would “all get along and work together in the spirit of compromise.”

Indeed, the EPP MEP Isabel Benjumea complained that the amendments in the EP proposal would jeopardise the success of the legislation. “It is very dangerous for us as the EU to exceed what has been agreed upon at the OECD,” she said.

“It seems that nothing is ever enough for the socialists; they want to raise and raise the tax rates without any assessment of the effect that this has on the real economy, the real growth of companies, on the creation of employment.”

In stark contrast, Green MEP Claude Gruffat advocated for even more ambitious amendments. “We need to show that the European Union is a driving force for fiscal justice. We also need to be ambitious in showing an alternative route is possible given the political will.”

Gruffat said the 15% tax rate threshold approved by the G20 and OECD was far too weak. “The United States kicked off negotiations at 21%, and the difference for the tax base in France alone when going from 15% to 21% threshold is substantial; we’re talking about several billions of euros here.”

Eugen Jurzyca (ECR) said the global tax deal could change international taxation for decades to come, and called for a cautious approach to the tax rates.

“Mirroring closely the OECD agreement is best. Being overly ambitious could be dangerous. I would not agree to raise the minimum effective tax rate to 21%.”

Jurzyca said that the quality of the legislation was more important than the speed at which it is produced and approved.

Gilles Boyer was more measured, but carried equal reservations for overstretching the mandate given to parliament. “We need to make clear what our ambitions are as a parliament without jeopardising the overall aim of this law.”

Boyer welcomed the introduction of a review clause and opening the legislation up to future changes in international agreements. However he also warned of “a real danger” in changing the threshold from 15% to 21%, which he said “could encourage non-cooperation. Also the proposal to remove the Commission’s exception for the maritime sector could have the same effect.”