The European Union is entering a time of economic crisis. The war and sanctions are causing unprecedented challenges: rising interest rates and inflation, spiking food and energy prices, and supply-chain disruptions. Governments must make their countries’ economic interests the priority and address the cost-of-living crisis.
Adopting the European Commission’s minimum-tax directive now would be a profound mistake. The directive is based on rules published in 2021 by a group of more than 100 countries collaborating to address tax challenges in the digital economy. It has two pillars: The first aims to put an end to big tech firms’ tax avoidance by making them pay their fair share of tax where their activities are performed and where their profit is created. The second aims to introduce a minimum 15% tax on corporate profit world-wide to put a floor on tax competition. The global tax deal was planned to come into force in 2023, but in May OECD Secretary-General Mathias Cormann announced that it may take longer to implement.