U.S. to terminate treaty with Hungary over resistance to global minimum tax

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Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member

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The Biden administration on Friday said it will terminate its four-decade-old tax treaty with Hungary over that country’s resistance to implementing a global minimum tax, as the United States seeks to create a global tax floor for large multinational corporations.

In a statement on Friday, the Treasury Department said the United States is ending the treaty with Hungary because “the benefits are no longer reciprocal,” citing a loss of tax revenue for the United States and little return for American investment in the country. Hungary, which has one of the lowest corporate tax rates in Europe, is currently blocking the European Union’s implementation of the global minimum tax agreement. World leaders have agreed on a 15 percent corporate tax floor, championed as a top priority by Treasury Secretary Janet L. Yellen. Hungary’s corporate tax rate is 9 percent. Each country in the European Union has veto power over the bloc’s tax agreements, and every other E.U. member country supports the proposal.

GOP officials back Hungary’s resistance to global tax deal, bucking Biden “The United States, across administrations, has had long-held concerns with Hungary’s tax system and the Hungary treaty,” the Treasury statement said. “We discussed these concerns with Hungary starting last fall, but are taking this step due to a lack of satisfactory action by Hungary to remedy these concerns.”

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marioIT

Active Member
lol they were a tax haven for decades and now are complaining smi(&%
I still remember when everyone and their dog rushed to get USA green cards, long term visas and citizenships, nowadays it feels REALLY good not having them...
 

Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member
Interesting insight below.

 

marzio

Mentor Group Gold
If it ends it will end from 2024. Hungary has a lot to loose either by loosing the treaty or accepting minimum global tax
 

Golden Fleece

Entrepreneur
That is a highly ironic development, as the U.S. itself may not be able to enact legislation to implement a global minimum tax.
The US Senate has an increasingly narrow path forward after Senator Joe Manchin said he wanted to wait until September to consider a bill that included committing to a 15% global minimum corporate tax, the cornerstone of a deal that Treasury Secretary Janet Yellen helped negotiate with nearly 140 countries last year.

Time is running out as Democrats only have until Sept. 30 to use the fast-track budget reconciliation process to pass the bill without the help of Republicans. With control of Congress at stake in November’s midterm elections, Republicans have already said they’ll let the current deal die if they regain power.
 

Golden Fleece

Entrepreneur
There we go! The 50th Democratic senator (out of 100 U.S. senators) needed to enact the 15% minimum tax on multinational corporations has announced his opposition. It will not pass this year. If the Republicans take control of the U.S. Senate this November (odds are about 50/50), then the legislation is dead until 2025.
Sen. Joe Manchin, D-W.Va., refused to back congressional Democrats' economic package partly due to a provision that would impose a 15% minimum tax on multinational corporations.

Meanwhile, the moronic Biden Administration is messing with Hungary for no reason. Talk about absurd.
 

marzio

Mentor Group Gold
United States’ Notification of Termination of 1979 Tax Convention with Hungary

 

marzio

Mentor Group Gold
Will everything be taxed twice now?

If nothing changes termination will be effective on January 8, 2023. However, as specified in the Convention, with respect to taxes withheld at source, the Convention shall cease to have effect on January 1, 2024.
 

lacomaco

Mentor Group Gold
Will everything be taxed twice now?
In a Double-tax treaties several types of income can be taxed in both countries, foe example dividends

There we go! The 50th Democratic senator (out of 100 U.S. senators) needed to enact the 15% minimum tax on multinational corporations has announced his opposition. It will not pass this year. If the Republicans take control of the U.S. Senate this November (odds are about 50/50), then the legislation is dead until 2025.


Meanwhile, the moronic Biden Administration is messing with Hungary for no reason. Talk about absurd.
This termination affects US taxpayers much more than Hungarians as the US obviously has much more investment in Hungary than vice versa… Quite surprisingly this “tax expert” does not even mention the biggest problem facing US investors which is that Hungary could become a CFC country… BTW Pillar 1 and Pillar 2 of the global 15% tax rules are not finalized yet, so this termination is just a polititical warning to others to behave
 

marzio

Mentor Group Gold
Orban should give up on his fight and let US think he is bending to US will and power because until Joe Manchin will give his vote, the global tax will not pass anyway.
 

Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member
United States’ Notification of Termination of 1979 Tax Convention with Hungary


Well Hungary will gain nothing from reversing course now to please U.S. I guess. Plus China will step in now anyway ;).

Chinese, Hungarian FMs hold phone talks on bilateral ties, Ukraine​


 

Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member

Golden Fleece

Entrepreneur
P.S The hypocrisy of the U.S. They terminate tax tax treaty with Hungary over their resistance to global minimum tax and then fail to implement it themselves :rolleyes:.
That stems from the continuing utter incompetence of the Biden Administration. Just to provide a second example, on his first day in office President Biden (selling out to the "environmental" lobby) signed multiple executive orders that immediately turned the U.S. from a net oil exporting country to a net oil importing country. Of course, that is the also the single largest factor that caused rampant inflation in the U.S. -- because energy costs impact every area of commerce and industry.
 
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