EU Finance Ministers skeptical of Pillar Two implementation timing

The EU’s plans to swiftly adopt the new tax directive, proposed in December 2021, to implement part of the OECD’s global tax rules was met with skepticism from Estonia, Poland, Hungary, Lithuania, and Malta.

Speaking during an Economic and Financial Affairs Council (ECOFIN) meeting, the foreign ministers of the four countries expressed concerns with the process and speed for adopting the directive, even though they showed support for the global minimum tax rules:

  • Hungary and Poland said that the implementation of Pillar One and Pillar Two has to be done in parallel; otherwise, the EU loses leverage in negotiations with third countries over Pillar One.
  • Malta said it had concerns of its own, which so far went unanswered.
  • Estonia said it had issues with the mandatory application of the rules for national companies (which it said was not part of the deal; with the progress with Pillar One (which it also thinks should be implemented with Pillar Two); with other technical matters.

The OECD’s new global tax rules are composed of two Pillars:

  • Pillar One establishes new rules for the allocation of profits
  • Pillar Two ensures that companies pay a minimum level of corporate tax on foreign income