Poland blocks progress on EU directive aimed at implementing Global minimum corporate tax agreed last yearthwarted the EU’s efforts to take the measure.

In a landmark agreement last October, 137 countries backed the introduction of a new minimum effective corporate tax rate of 15%, known as Pillar 2, for large companies.

The reform will increase global tax revenue by more than $150 billion annually. The same agreement also supports forcing the world’s 100 largest multinational corporations to declare profits and pay more taxes in the countries where they do business, known as “pillar one”.

To make the deal a reality, countries need to incorporate minimum taxes into their domestic laws. The EU plans to do this through a directive, which will require the unanimity of all member states to go ahead.

However, on Tuesday, Poland Meeting EU finance ministers in Luxembourg.

Poland’s Finance Minister Magdalena Rzeczkowska has argued that the country cannot support a continued minimum tax without “legally binding” guarantees that reforms will be implemented for the largest 100 companies.

That part of the deal requires countries to agree to a multilateral pact, and negotiations have progressed more slowly than plans for a global minimum tax.

“We strongly believe that without ensuring that digital giants are fully taxed under the first pillar, we should be mindful that placing additional burdens on European businesses under the second pillar is not enough,” Rzeczkowska said.

The decision has sparked frustration among other member states, including France, whose finance minister Bruno Le Maire has been leading negotiations on the directive, as part of France’s rotating EU presidency, which will take place in June. end.

He noted that through the OECD negotiations, the agreement has the support of all EU member states, including Poland, at the international level. The council “addressed” Poland’s concerns by including language that indicated the EU intended to work on the two parts of the deal as a package.

“I will make it very clear that I absolutely do not believe what Poland is saying,” Le Maire told a council meeting.He added that all member states were working hard to find consensus and said he “deeply regrets it”[ed] Poland does not understand this”.

Speaking after the Economic and Financial Affairs Committee meeting, Valdis Dombrovskis, the committee’s executive vice-chairman, said he could not explain Poland’s motives and justifications. But he hopes to reach a deal at next month’s meeting.

“This mystery must be raised with Warsaw, not by the French president,” Le Maire added.

Separately, Poland is in talks with Brussels to release its share of the EU recovery fund.

This development means that the implementation of the global tax agreement remains stalled on both sides of the Atlantic.

Draft legislation included in U.S. President Joe Biden’s Build It Back Better Act to align the U.S. tax system with international proposals for a global minimum tax has been delayed as Democrats have been unable to gain party support.

Washington and Brussels have yet to introduce draft legislation on the first pillar.

However, when asked if a global tax deal was “in jeopardy” because of obstacles in the US and EU, Le Maire said the determination to pass it remained firm.