The Global Minimum Tax and Its Potential Impact on the Competitiveness of the Hungarian Corporate Tax System

Abstract

In 2021, an agreement on the application of a global minimum tax was concluded, which was later adopted at the EU level in the binding form of a Directive. Such tax reforms entail significant changes in the operation of international and domestic tax rules. This study examines the expected effects of the global minimum tax on the tax incentives that function in the Hungarian corporate income tax system. This issue is approached by examining various types of tax incentives (general, entity-related, and economic activity-related) considering the features of global minimum tax rules. Furthermore, the study aims to identify the aspects and circumstances inherent in either the rules of the global minimum tax or the Hungarian tax system that can potentially mitigate the adverse effects of the global minimum tax on tax incentives. In the light of these findings, this study also provides tax policy considerations that can contribute to preserving the current corporate income tax system and its incentives in the most intact form.