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Magyar telcos call on govt to reverse plan to increase taxes

19 Jun 2013

Dow Jones Newswires reports that telecommunication services providers and IT companies in Hungary have called on the government to halt plans to increase telecoms-related taxes in the country, amid concerns it will stifle investment in new technologies and the development of the broadband services market. In a statement, the Association of Information Technology, Telecommunications and Electronics Companies (IVSZ) warned that the administration’s plan will create an ‘unpredictable tax environment’ that will adversely affect telcos’ and IT firms’ desire to invest there. The IVSZ went on to note that where the tax hike concerns the Magyar mobile sector, the increases, if rubber-stamped by Parliament, could ‘considerably reduce the market value of the frequencies the government plans to sell this year’.

On Monday, the government announced plans to increase a so-called ‘special’ telecoms-sector tax from 1 August 2013, which cellcos will be prohibited from passing on to their subscribers. The hike forms part of a series of tax measures designed to ensure that Budapest complies with European Union (EU) defined limits on national budget shortfalls, the government said. As such, the administration intends to increase the levy to HUF3 (USD0.0138) per minute for voice calls (or per SMS), for all business customers, from the current HUF2 figure. Further, it is looking to double the monthly tax ceiling per business customer to HUF5,000 – although the figure would remain unchanged for all other users.

In noting its ire at not being consulted beforehand by the government, the IVSZ said that the planned tax increase would mark the third major change in the taxation regime within a year. Budapest has already implemented two separate – and controversial – telecoms specific taxes on fixed line operators, and the IVSZ adds that taxation of the mobile industry is ‘exceptionally high’ in comparison to other international markets.


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