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‘We are one millimeter away’ from global tax deal, French finance minister says

‘We are one millimeter away’ from global tax deal, French finance minister says

PARIS – A global deal on corporate tax should be completed before the end of this month, top EU officials told CNBC Wednesday.

Global governments have been involved in tough negotiations to bring a handful of nations in line with a international deal on corporate tax. The G-7 and G-20 nations backed an agreement earlier in the summer that, if implemented, would force multinationals to pay tax where they operate — and not just where they have their headquarters – and impose a minimum corporate rate of 15%.

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Some nations, notably Hungary and Ireland, where corporate tax is below 15%, had raised doubts about the agreement. However, discussions led by the Organization for Economic Cooperation and Development seem to be baring fruit.

Bruno Le Maire, the French Finance Minister, told CNBC Wednesday that “we are one millimeter away from a global agreement on a new international taxation system for the 21st century.”

“I’m fully determined to pave the way for a consensus,” he said in Paris.

“The key point is to have an agreement being adopted, no later than the end of this month, on the new international taxation system.” He later added: “We could either next week during the Washington meetings, or at the G-20 meeting in Rome at the end of October, sign the final agreement under the international taxation system.”

Also speaking in Paris Wednesday, Valdis Dombrovskis, the European Commission Vice President for Trade, said: “We hope that the OECD agreement can be finalized during October. We are also working with EU member states to make sure all are on board concerning the international tax agreement.”

“And we are ready from our side also then to put forward legislative proposals to ensure the uniform implementation of the this agreement across the EU.”

On Tuesday, Luxembourg Finance Minister Pierre Gramegna also told CNBC: “We are very close to [a] compromise, in a few days, that will involve all countries.”

Ireland has signaled over the last 48 hours that recent changes to the agreement were welcome. Leo Varadkar, the country’s deputy prime minister, said that the new text “does respond to a lot, if not all of the concerns” that his country had, the Financial Times reported.

Meanwhile, Ireland’s Environment Minister Eamon Ryan said he was hopeful and confident that Ireland will be part of the solution in this context. Paschal Donohoe, the country’s finance minister, said in Luxembourg that he would be discussing the revised tax deal at a cabinet meeting on Thursday and expressing his opinion thereafter.

Despite the comments from Ireland, Estonia and Hungary are among the group of nations that have yet to approve the agreement.

Speaking to CNBC Wednesday, Péter Szijjártó, Hungary’s foreign affairs minister, said his country’s corporate tax rate of 9% is a “huge advantage” and that tax competition is not harmful.

He also said that 15% is “high” but understands there is “no room” for movement from the leading negotiators. Hence, Hungary has proposed an implementation period of 10 years and is hoping this will be accepted by counterparts.

‘We are one millimeter away’ from global tax deal, French finance minister says