Hungary to press ahead with internet tax reduction despite EC objection

Hungary is set to reduce its VAT on internet services from 27% to 18% at the beginning of 2017, as was approved by the Hungarian parliament in June, reports Broadband TV News citing local reports which quote government sources. Pierre Moscovici, the EU Commissioner for Economic and Financial Affairs, has asked the Hungarian government to postpone the internet tax reduction as current EU rules do not specifically allow internet services to be attributed a preferential VAT rate. Moscovici has added, however, that the European Commission plans to change the related directive and introduce more flexible regulations. As previously reported by TeleGeography’s CommsUpdate, Hungary intends to cut the VAT rate applied to internet subscriptions by nine percentage points only for telcos involved in the deployment of an ‘ultra-fast’ broadband network; it was previously expected that the government would inject HUF150 billion (USD550.9 million) to boost the deployments.