The U.S. Treasury on Friday said it was moving to terminate a 1979 tax treaty with Hungary in the wake of Budapest's decision to block the European Union's implementation of a new, 15% global minimum tax.

The deal's framework, agreed to by nearly 140 countries in October after years of negotiations, includes a 15% global minimum tax rate designed to stop companies from stashing profits overseas to dodge their tax obligations, a key driver of what's been dubbed the "race to the bottom" on corporate taxation. The Tax Foundation notes that the average statutory corporate tax rate worldwide was 40.11% in 1980; in 2020, it was 23.85%.

A 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." 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.