Although announced on the agenda of the Ecofin Council of 24 May (see EUROPE 12957/9), the directive aimed at EU transposition of Pillar II of the OECD agreement reforming the taxation of large companies was not discussed by the EU Finance Ministers, due to Poland blocking it.
From now on, the objective for the French Minister, Bruno Le Maire, is to reach a consensus at the next meeting of the Finance Ministers on Friday 17 June, the last one under the French Presidency of the Council. “I will continue to increase bilateral exchanges in the coming days with this objective in mind”, he assured a press conference.
He said he was “optimistic” that this objective would be achieved, as he was “not far from finding the right wording to define a binding political link” between Pillar II and Pillar I, on digital taxation. Unanimity of the Member States in the Council is indeed required in tax matters.
However, he admitted that the National Recovery and Resilience Plan (NRRP) was one of the issues on the table that prevented Poland’s endorsement (see EUROPE 12957/35), despite Polish denials at the last Ecofin Council (see EUROPE 12926/25).
The international convention implementing this first pillar is also likely to be delayed. Mathias Cormann, the OECD Secretary-General, told the World Economic Forum in Davos that morning that ratification of the international agreement on corporate taxation will be postponed until after the US mid-term elections on Tuesday 8 November. He said it was in the “rational interest” of all countries to adopt Pillars I and II, while a Republican Congress could derail the deal.
As the text implementing Pillar I is expected in July, European Commission Vice-President Valdis Dombrovskis reiterated the Commission’s commitment at the press conference: “We will move ahead as fast as all the state of play international discussion allow, we’ll move forward without unnecessary delay”.
Le Maire provided assurances that he was working hard to convince the international community and OECD members to do their utmost to reach a consensus in the coming months, either by the end of 2023 or by the beginning of 2024, and the “keypoint is to have a total [...] international taxation system at the end of the negotiations”.
He also praised the personal efforts of Janet Yellen, the US Treasury Secretary, with whom he regularly interacts. “When Europe and the US move in the same direction, it is a good thing for the rest of the world’s states” he concluded. (Original version in French by Anne Damiani)