By Jan Strupczewski
BRUSSELS (Reuters) -Poland was on Thursday holding up the European Union’s formal adoption of a minimum corporate tax for large companies which, as part of a whole package of deals, also holds up financing for Ukraine, diplomats said.
The minimum tax, along with 18 billion euros ($19 billion) of funds for Ukraine next year, the approval of Hungary’s recovery plan and the suspension of some EU budget funds for Budapest were all part of a complex deal reached by EU governments on Monday.
The pact was to be signed off by Wednesday, but Poland has twice demanded an extension of the deadline, the latest being 12:00 p.m. (1100 GMT) on Thursday.
“It’s the whole package that is held up over Polish issues with the global tax that no one understands,” one EU diplomat said. “We have no clue what (Polish Prime Minister Mateusz) Morawiecki wants or will do – he’s already agreed to the tax in spring,” the diplomat said.
Speaking to reporters on entering the EU summit, Morawiecki called the deal reached on Monday a form of blackmail.
“Combining aid for Ukraine with such distant topics which have nothing to do with aid like corporate tax is unnecessary, it is a mistake and an attempt at blackmail,” Morawiecki said.
Before the Monday deal, EU governments had decided to discuss the four separate issues as a package because it was the only way to make sure Hungary would approve the financing for Ukraine and the global tax – two issues it had held hostage to extract financial concessions from the EU, diplomats said.
EU diplomats speculate now that Warsaw, having seen that Hungary’s tactics had been successful, may be holding the whole package hostage again to get a clear commitment from the rest of the 27-nation bloc that Poland would get billions in EU recovery funds now blocked by a rule of law dispute with Brussels.
“On Monday we heard that they needed time to get the justice minister on board. Not sure how these extensions intertwine with what’s going on with him and with the measures presented to parliament on judicial independence,” one official said.
The issue is likely to come up at a summit of EU leaders in Brussels on Thursday.
The global minimum corporate tax of 15% was agreed by 140 countries in the Organisation for Economic Cooperation and Development in 2021 to prevent large international firms from shifting profits around the globe to cut their tax bills and thereby eroding countries’ tax bases.
The minimum tax is to apply to companies with an annual turnover of at least 750 million euros and each EU country will have to adopt it into national law by the end of 2023. Large firms will have to pay the minimum rate from the start of 2024.
($1 = 0.9399 euros)
(Reporting by Jan StrupczewskiEditing by Mark Potter and Elaine Hardcastle)
