Poland Edging Toward Support For EU Minimum Tax

Poland is expected to drop its veto of the European Union's 15% minimum tax during the June meeting of the bloc's finance ministers or early in the second half of 2022, diplomats from multiple member countries told Law360 on Tuesday.

Numerous officials said they viewed Poland as ready to support the measure after approval from Brussels to receive its €35.4 billion ($37.9 billion) share of European coronavirus recovery funds.

The country has been the sole voice opposing the draft law transposing an international agreement on a 15% global minimum tax into EU law. It had argued that the new tax rate floor must be linked to the other aspect of the so-called two-pillar deal facilitated by the Organization for Economic Cooperation and Development, which would reallocate taxing rights among countries.

Both Poland and the European Commission, the EU's executive branch, have denied any link between the coronavirus economic recovery funding and discussions regarding support for the minimum tax. Poland's recovery plan had been held up over concerns about the country's respect for the rule of law and the independence of its judiciary.

While the vote passing the minimum tax could occur at the last meeting of EU finance ministers during France's rotating presidency on June 17, this is by no means a done deal. The officials, speaking on condition of anonymity, were reluctant to say for sure that Warsaw would miss an opportunity to deny Paris credit for carrying the flagship policy over the line.

"There's a strong feeling and faith now that the directive will be approved in June unless Poland wants to annoy the French for the sake of it — which wouldn't be unheard of," a European official said. "That would then leave it to the Czechs to wrap it up."

France is leading meetings of EU ministers for the first six months of this year and has said it wants to have an EU deal on the 15% minimum tax for large corporate groups during its time at the helm. It has so far struggled to persuade Poland to agree to the text, and under EU law, all member countries must agree to tax measures for them to be approved.

The minimum tax, known as Pillar Two, forms part of a global tax deal developed by the OECD and backed by 137 jurisdictions — including all EU nations — in October. Pillar One involves a redistribution of taxing rights away from jurisdictions where management takes place toward those where companies' customers are based.

The Polish government did not immediately respond to a request for comment.

--Editing by Neil Cohen.

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