Poland accused of hostage diplomacy as global tax debate scrapped

Senior diplomats and European Commission officials have accused Poland of continuing to hold hostage a planned law to impose a minimum 15 percent tax rate for multinationals, after a debate on the rules was scrapped at the last minute late Monday.

EU finance ministers were set to debate the proposed law, which is designed to obliterate tax havens and ensure multinational firms pay their fair dues, at a meeting Tuesday. But late Monday, the French presidency of the Council of the EU removed that point from the agenda for the meeting, due to Warsaw’s persistent refusal to come on board.

Since talks began on the EU bill that would implement the initiative, which was negotiated under the stewardship of the Organization for Economic Cooperation and Development, Poland has repeatedly demanded the tax rate be legally tied to the introduction of a separately negotiated global levy for the world’s 100 biggest companies. That’s an impossible ask that risks toppling the entire process, and is a position Poland hadn’t voiced in the OECD negotiations.

European officials told Brussels Playbook they believe Warsaw is still holding the law hostage to force the European Commission to release cash earmarked for the coronavirus recovery — which Brussels has blocked over rule of law concerns in Poland.

The stalemate highlights deep-seated divisions that remain between Warsaw and Brussels, despite Poland’s leading role in staring down Russia over the Kremlin’s lethal war on Ukraine.

U.S. Treasury Secretary Janet Yellen said earlier this month that “Poland has some issues with the EU — frankly, I don’t think that they largely pertain to the global minimum tax itself, but rather other issues between Poland and the EU.” Warsaw refutes the accusation.

All hope is not lost, however. Commission officials last week told POLITICO that Brussels is about to approve the recovery fund’s payout to Poland, which could unblock the tax deal.