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Treasury spokesperson said that since Hungary lowered its
corporate tax rate to 9% - less than half the 21% U.S. rate -
the tax treaty unilaterally benefits Hungary.
"The benefits are no longer reciprocal - with a significant loss
of potential revenues to the United States and little in return
for U.S. business and investment in Hungary."
The timing of the termination following years of U.S. concerns
about the treaty suggests that Treasury is using it to try to
pressure Hungarian Prime Minister Viktor Orban to agree to
implement the 15% global minimum tax agreed by nearly 140
countries.
Affirming the Hungarian government's position, Foreign Minister
Peter Szijjarto said that the global minimum tax would ruin
Europe's competitiveness and endanger jobs in Hungary.
"Based on all this - no matter how hard the pressure is on us -
we obviously do not support the introduction of the global
minimum tax in Europe," he said in a Facebook post on Saturday.
"And we continue our professional consultations on tax issues
with our Republican friends."
Termination of the treaty is expected to be completed in six
months after the U.S. Treasury sends formal notification to
Hungarian authorities.
"Hungary made the U.S. government’s longstanding concerns with
the 1979 tax treaty worse by blocking the EU Directive to
implement a global minimum tax," the Treasury spokesperson said.
"If Hungary implemented a global minimum tax, this treaty would
be less one-sided. Refusing to do so could exacerbate Hungary’s
status as a treaty-shopping jurisdiction, further disadvantaging
the United States."
(Reporting by David Lawder, additional reporting by Anita
Komuves in Budapest; Editing by Nick Macfie and Emelia
Sithole-Matarise)
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