New telecom tax seen as a threat to investment

14 Oct 2010

Plans to implement a new tax on the telecoms sector could damage the development of the country’s market and weaken the pace of technological rollouts, the Budapest Business Journal writes citing a report from local consultancy firm IFUA Horvath and Partners. The findings, published in the wake of Prime Minister Viktor Orban’s announcement on the proposed new tax yesterday, notes that the experience of other European Union (EU) markets shows that there is no credible case to support a special tax on the sector. A statement from the consultancy said that as a rule, EU member states opt to cut the level of taxes – if so permitted – in order to stimulate economic growth. Moreover, EU regulation does not favour ‘special’ taxes on the telecoms sector and Brussels holds the view that service providers can only be charged for costs related to regulations and, as a result, recently instructed both France and Spain to cancel plans to impose the so-called special tax. A spokesperson for IFUA Horvath and Partners told local press that up to HUF200 billion (USD1 billion) is invested in the Hungarian telecoms market each year by between 80 and 100 companies active in the sector. They estimate that the industry generates revenue of HUF1.3 trillion per annum of which, HUF1 trillion is accounted for by the three largest operators Magyar Telekom, Telenor (formerly Pannon) and Vodafone.

Hungary