Cyprus could veto the EU’s adoption of Joe Biden’s proposal of a global minimum corporate tax rate, the country’s finance minister has suggested.
A White House proposal of a 15% tax rate for multinationals applied to profits in all jurisdictions is expected to be endorsed in principle by finance ministers of the world’s seven largest economies, the G7, at an upcoming meeting in Cornwall.
The intention is to prevent multinationals from shifting their profits across borders to exploit the most attractive low-tax locations.
Under the proposal, should companies seek to book their profits in a low-tax jurisdiction, the country in which the multinational is headquartered would impose additional tax to ensure that the global minimum rate is still applied.
There is significant support for the idea within Europe, but speaking to the economic and monetary affairs committee of the European parliament, Cyprus’s finance minister, Constantinos Petrides, said his government would be opposed to an EU directive that constrained national tax policymaking. An EU directive on taxation would require unanimous support from the 27 member states.
Cyprus and Ireland have the lowest corporate tax rates in the EU at 12.5%, and both countries have framed the debate as one of national sovereignty.
“We are in favour of retaining the…