By David Lawder

WARSAW (Reuters). Despite expressing gratitude to Poland’s hosting of millions of Ukrainian war refugees on Monday, U.S. Treasury Secretary Janet Yellen has another goal: convincing Polish leaders to support plans to establish a global corporate minimum income tax at 15%.

Poland remains the only skeptic in the European Union’s implementation plan. It vetoed an April compromise to allow the launch of the 137-country agreement last October. This deal was intended to end a downward spiraling corporate tax rate.

Magdalena Rzeczkowska is the new Polish finance minister. She has called for an “legally bound” connection between the global minim tax and the other pillar in tax negotiations. This would allow large multinationals with high profits to reallocate taxing rights and “market” countries where they sell their services.

For certain countries that participate in the Organisation for Economic Co-operation and Development’s negotiation, the so-called Pillar 1 plan is the preferred global tax change. It allows them to get revenue from big U.S. technology companies like Alphabet (NASDAQ;), Facebook (NASDAQ.) owner Meta and Amazon.com.

The October deal did not include the reallocation pillar and it is still not complete. This more complicated plan will require changes to international tax treaties. Rzeczkowska expressed concern that the global minimum tax could place undued burdens on European companies if it is not successful.

The current French finance minister Bruno Le Maire is the chair of EU Finance Ministers. He expressed doubt about these arguments in light of ongoing legal disputes between Poland, EU, and France.

EXTRA REVENUE

Yellen will be meeting Rzeczkowska as well as Mateusz Morawiecki (Polish Prime Minister) and Adam Glapinski, Governor of the central bank. She will also visit a World Central Kitchen that provides meals for Ukrainian refugees as well as a museum dedicated to Jewish history.

A source close to OECD tax negotiations said that Yellen would emphasize the benefits of Poland adopting the global minim tax. That is, an estimated $2Billion in annual revenue. This could offset high hosting costs for the Ukrainian refugee population.

Sources say that these revenues will be paid by multinational corporations and not individuals or small businesses from Poland. The source was not allowed to discuss the matter publicly. “It will shift investments from traditional tax havens countries to countries like Poland which are able to compete on the basis if their workforces as well as their economic fundamentals.”

Although the U.S. Treasury did not comment on Yellen’s messages in detail, it said that she would discuss the global minimum income tax agreement at the Poland meeting.

Yellen will need to reassure Polish officials concerning growing concerns over U.S. enforcement of the global minim tax. Manal Korwin, chief of KPMG’s Washington tax practice and a former U.S. Treasury official, stated that Yellen also needs to reassure them about U.S. implementation.

U.S. Congress should approve the changes to the U.S.’s current global offshore minimum tax of 10.5%, also known as “GILTI”, raising the rate up to 15%, and converting it into a country-by–country system.

These changes were originally included in the U.S. President Joe Biden’s comprehensive social and climate spending bill. However, it was stalled last spring after opposition from centrist Senate Democrats.

The prospects for a more balanced spending package and tax reforms look less likely as the mid-term congressional election approaches. Additionally, lawmakers are expressing concerns about higher inflation and spending.

Corwin however stated that U.S. inaction will most likely not prevent the other 136 members from progressing, especially if Poland becomes a member of EU implementation.

Corwin stated that if the EU directive succeeds, then I believe the rest of world will move either with or without U.S. changes. So my impression is that it’s not as troubling to countries than it may have been.

According to tax experts, the EU implementation could eventually put pressure on America to make the necessary changes. This is because the U.S. would see some of the taxes that they have paid to multinationals to be transferred to foreign jurisdictions instead to the Treasury.

Yellen reversed Trump’s previous objections to a global taxing agreement and has succeeded in convincing the remaining holdouts. Ireland was one of these countries, and it agreed to increase its 12.5% corporate rate to 15%.

Josh Lipsky, Director of the Atlantic Council’s GeoEconomics Center, stated, “Anywhere she’s spoken with and lobbied about this, including Ireland,”