Global minimum tax
February 3, 2025
Starting January 1, 2025, regulations on the global minimum tax came into force. These provisions implement Council Directive (EU) 2022/2523 of December 14, 2022, aimed at ensuring a global minimum level of taxation for multinational enterprise groups and large domestic groups within the European Union. This directive is a result of the OECD’s work under the BEPS 2.0 project. According to expectations, more than 140 countries worldwide will introduce this tax.
What is the purpose of introducing the global minimum tax?
The goal of these regulations is to combat tax avoidance by global corporations through the shifting of income to jurisdictions with low tax rates. The additional levy aims to level the playing field in tax competition by ensuring that companies pay an effective income tax rate of no less than 15%. If the effective tax rate of a group in a given jurisdiction is below 15%, the group will be required to pay a top-up tax. The global minimum tax system will essentially involve three types of taxes:
- a global top-up tax,
- a domestic top-up tax,
- and a tax on undertaxed profits.
Who is affected by the new tax?
The new obligations will apply to corporate groups with consolidated global revenues exceeding €750 million annually in at least two of the last four fiscal years immediately preceding the tax year. These regulations will not apply to government entities, international organizations, pension funds, or purely domestic groups.
How should these regulations be interpreted?
This means that when using tax reliefs, such as for research and development or special economic zones, that reduce effective taxation below 15%, taxpayers will still be required to pay a top-up tax. Consequently, the global minimum tax will not only impact groups avoiding taxation but also those with low profitability. The introduction of these regulations in their current form raises questions about the viability of using tax reliefs and could lead to reduced investments. Entrepreneurs are therefore calling for amendments to the proposed law. Currently, the Ministry of Finance proposes introducing cash grants instead of corporate income tax exemptions in economic zones.
It is worth noting that 2024 marks the first year of Poland’s domestic minimum income tax. Despite the similarity in terms, these are separate regulations.
Delay in implementing the tax
EU member states were required to implement the global minimum tax regulations by December 31, 2023. Due to delays, the European Commission has initiated infringement proceedings against several countries, including Poland.
Tags global minimum tax, globalny podatek minimalny, podatek wyrównawczy, top-up tax
