Hungary says it is signing up to a 15 percent global minimum tax rate on multinational corporations, becoming the last member of the European Union to do so after Ireland and Estonia joined on October 7, bringing the international reform a step closer.
The agreement is aimed at preventing international corporations from paying less tax by registering in countries with low rates.
The Organization for Economic Cooperation and Development brokered the deal, and it was approved by the Group of 20 in July.
"A compromise has come about that we are able to join wholeheartedly," Finance Minister Mihaly Varga said. "Hungary will be able to collect the global tax using a targeted solution."
"Hungary's position has been consistent throughout: we made it clear that we would only adopt a global minimum tax that does not lead to a tax increase in Hungary, does not endanger the competitive advantage of the Hungarian economy, and protects the workplaces of the Hungarian people," Varga said.
On October 7, Ireland dropped its opposition to the overhaul, agreeing to give up its 12.5 percent rate for large multinationals, which helped it lure Apple, Google, Facebook, and other large corporations to make Ireland the location for their European headquarters.
Finance Minister Paschal Donohoe announced the government's decision at a news conference, saying that joining the agreement ensures that Ireland "is part of the solution."
The decision is a reversal of the stated policy of successive Irish governments that vowed never to give up the low rate. Some 1,500 multinationals that will be hit by the higher rate currently employ around 400,000 people or one in six workers in Ireland, Donohoe said.
He said he nevertheless was "absolutely satisfied that our interests are better served within the agreement."
Estonia had been concerned that joining the reform could threaten its tech start-up sector, but Prime Minister Kaja Kallas said on October 7 that it "will not change anything for most Estonian business operators, and it will only concern subsidiaries of large multinational groups."
The U.S. Treasury Department has pressed countries to support the global minimum tax.
"We are on the way to a generational achievement of creating a global minimum tax, which would create a more level playing field so jobs and investment can flourish in the United States," U.S. Treasury Secretary Janet Yellen said on October 7.
