Global Minimum Tax for Sustainable Development in Hungary

Abstract

This paper seeks to offer a comprehensive background on global minimum tax rules as a critical element of sustainable tax policy and explore their impact on Hungarian tax law. A sustainable tax policy that considers variations in wealth and development among countries, as well as solidarity, is a crucial source of funding for sustainable development. In December 2022, EU Member States reached a consensus to implement the global minimum tax rules, referred to as Pillar 2 in the OECD’s international tax reform. In this context, every EU Member State has pledged to incorporate the global minimum tax rules from the EU Directive into their national legislation by the end of 2023, with full implementation of its core components set to begin in 2024. Considering the aforementioned, the study focuses on the sustainability of the Hungarian tax system. Developing new tax legislation in this domain necessitates thorough evaluation and analysis to safeguard the country’s tax revenue. It is equally important to identify an optimal solution that avoids imposing a substantial tax burden on the majority of businesses. As a result of this study, considering the specific conditions and challenges in Hungary, introducing a domestic minimum top-up tax emerges as a judicious and well-suited option. The implementation of global minimum tax rules could also serve as a long-awaited and effective tool in the fight against international tax evasion.