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EU worries over the pillar two vote

This week in Parliament, European Commissioner for the Economy Paolo Gentiloni provided more details on tax reform, including strategies for implementing the OECD's two-pillar approach by "any means necessary."

Concerns about the unanimity criteria for enacting pillar two were raised by members of the European Parliament at their discussion with Gentiloni on September 26 as part of the Committee on Economic and Monetary Affairs.

Gentiloni referred to Hungary's refusal to accept the negotiated phrasing in the minimum taxation regulation in July as a "veto" that must be overridden.

"We have to do this with all the legal and political means that we have at our disposal… We are not lagging behind at a global level because we were very fast in making the proposal," he claimed.

With all the political and legal tools at our disposal, he said, "We are in the lead and to remain in the lead we must overcome this veto."

The Passerelle Clause under Article 47(7) of the Treaty on the Functioning of the EU (TFEU), Article 116 of the TFEU, and enhanced cooperation under Articles 326-334 of the TFEU are some of the tools available to the European Commission to implement tax policy with a qualified majority in the Council.

As unanimity requirements continue to prevent the European Council from enacting a directive on pillar two, it was revealed earlier this week that political support for qualified majority voting is at an all-time high.

Zbynk Stanjura, the minister of finance for the Czech Republic, stated to the ECON committee in July that the goal of his Council presidency is to reach consensus on the pillar two directive by the end of October. The Economic and Financial Affairs (Ecofin) Council is allegedly losing political momentum for taxes, according to MEPs present at the committee meeting.

According to Spanish MEP Ernest Uratsun, "The Parliament and Commission should be more vocal in pushing the Ecofin to unblock all those issues we need to deliver in just over a year."

Even though there is a lot of interest in employing a qualified majority to pass pillar two, the directive is not on the agenda for the October Ecofin Council meeting.



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