tax competition

A global minimum tax model will reduce tax competition and put companies in a race for public subsidies. The idea of a minimum corporate tax rate of 15% for multinational groups, floating around in international platforms since 2013, has been implemented from the beginning of this year. The Organisation for Economic Co-operation and Development agreed on a new tax regime in 2021, followed a year later by the European Commission.

Lithuania ranks sixth in the Global Tax Competitiveness Index but it has the least attractive corporate tax regime in the Baltic region. It taxes retained and reinvested profits and applies a personal income tax when dividends are paid out. The effective combined tax rate stands at 27.7%. Estonia and Latvia tax only redistributed profits, at 20%.

The European Commission has prepared a Roadmap for more efficient law-making in the field of taxation: identification of areas for a move to qualified majority voting. The aim of the proposal is to explore possibilities for removing the need for unanimous agreement by all countries and moving to qualified majority voting in taxation.

In order for the EU to prosper as a political, economic and social construct, it needs to be more competitive – including in the field of tax policy, and also to respect sovereignty and find unanimously agreed solutions on major issues.