Economy
Will Vodafone choose Romania over Hungary for software development centre?
Strategic deals provide no means for companies to affect policy
György Beck, head of the Vodafone Hungary Zrt., told the WSJ the cabinet’s strategic co-operation agreements fail to provide companies with the much needed means to influence the government’s sometimes punitive economic policy.
“It’s unclear what the agreements are about. There’s no forum to discuss telecommunications issues, no dialogue, while drastic changes have hit us over the past three-four months," he said.
The telecoms sector is a significant player in the Hungarian economy, generating 10% of the country’s gross domestic product while it has been hit hard by tax hikes, the paper cited Beck as saying. The government has levied a tax for every minute users speak on their phones and will introduce a further levy on utility networks.
Gov’t to seal nearly 40 deals
This Wednesday, the local unit of U.S. tech giant Microsoft Corp. became the latest in a growing list of companies to sign strategic cooperation agreements with the government. In September, Péter Szijjártó, state secretary in charge of foreign political and economic affairs at the Prime Minister’s Office, said some 40 such deals could be expected in the near future. He said the aim was to make these mostly foreign-owned and export-focused companies feel more at home and in a predictable environment and to achieve that they reinvest the largest possible part of their profits generated in Hungary.
The latest accord comes hard on the heels of one signed earlier this week with General Electric Co., the sixth-largest U.S. firm last year by gross revenue and which has been in Hungary for the past 23 years.
The first in the expectedly long line of companies with which the government forges strategic alliances was Coca-Cola, which has so far invested over HUF 100 billion in Hungary.In the second agreement signed with drugs producer Richter the government pledged to stimulate Richter’s innovation and development activities with its available means, while Richter vowed to strive to expand its local manufacturing capacities and R&D activity.
The next in line was Alcoa-Köfém in early November, followed by tyre maker Hankook Tire and recently General Electric, the sixth-largest U.S. firm last year by gross revenue and which has been in Hungary for the past 23 years.The cabinet also inked strategic co-operation deals with vehicle producers, such as Daimler and Suzuki.Will Vodafone choose Romania over Hungary?
“Romania has better chances at present that it will be chosen above Hungary as the site for Vodafone’s new software development centre because of its more favourable tax regime and higher number of IT specialists. Vodafone has emphasised, though that there is no decision on this matter yet and that talks between Vodafone and the Hungarian government are still underway.
Taxes on Hungary’s telecom sector
Special telecom tax
Local carriers have been paying this sectoral tax since 2010, but it will be phased out as of 2013.
Telephone tax
Hungary’s Parliament approved a telephone tax to be introduced on 1 July 2012 without any date set for its phasing out. The tax is HUF 2 per minute for fixed-line and mobile voice services and also two forints per SMS and MMS. The tax was capped at HUF 700 per month for private individuals (one call number) and at HUF 2,500 for anyone else.
This year the telecom companies are subject to both the telecom sector levy and the telephone tax.
Utility infrastructure tax
As of 1 January 2013, the government will introduce a tax on utility infrastructure, i.e. on the owner of water, sewage, natural gas, heating, electricity and telecommunication pipelines and cables. When the owner is the state or a municipality, the operator will be subject to the levy. The tax will be HUF 125 per metre and will be payable in two equal instalments by 20 March and 20 September. In case of telecom cables the tax will be differentiated according to the length of the line. 20% of the full tax is payable on the first 170,000 metres, 40% between 170,000 and 240,000 metres, 80% between 250,000 and 300,000 metres and 100% over the part above the 300,000-metre mark.
György Beck, head of the Vodafone Hungary Zrt., told the WSJ the cabinet’s strategic co-operation agreements fail to provide companies with the much needed means to influence the government’s sometimes punitive economic policy.
“It’s unclear what the agreements are about. There’s no forum to discuss telecommunications issues, no dialogue, while drastic changes have hit us over the past three-four months," he said.
The telecoms sector is a significant player in the Hungarian economy, generating 10% of the country’s gross domestic product while it has been hit hard by tax hikes, the paper cited Beck as saying. The government has levied a tax for every minute users speak on their phones and will introduce a further levy on utility networks.
Gov’t to seal nearly 40 deals
This Wednesday, the local unit of U.S. tech giant Microsoft Corp. became the latest in a growing list of companies to sign strategic cooperation agreements with the government. In September, Péter Szijjártó, state secretary in charge of foreign political and economic affairs at the Prime Minister’s Office, said some 40 such deals could be expected in the near future. He said the aim was to make these mostly foreign-owned and export-focused companies feel more at home and in a predictable environment and to achieve that they reinvest the largest possible part of their profits generated in Hungary.
The latest accord comes hard on the heels of one signed earlier this week with General Electric Co., the sixth-largest U.S. firm last year by gross revenue and which has been in Hungary for the past 23 years.
The first in the expectedly long line of companies with which the government forges strategic alliances was Coca-Cola, which has so far invested over HUF 100 billion in Hungary.In the second agreement signed with drugs producer Richter the government pledged to stimulate Richter’s innovation and development activities with its available means, while Richter vowed to strive to expand its local manufacturing capacities and R&D activity.
The next in line was Alcoa-Köfém in early November, followed by tyre maker Hankook Tire and recently General Electric, the sixth-largest U.S. firm last year by gross revenue and which has been in Hungary for the past 23 years.The cabinet also inked strategic co-operation deals with vehicle producers, such as Daimler and Suzuki.Will Vodafone choose Romania over Hungary?
“Romania has better chances at present that it will be chosen above Hungary as the site for Vodafone’s new software development centre because of its more favourable tax regime and higher number of IT specialists. Vodafone has emphasised, though that there is no decision on this matter yet and that talks between Vodafone and the Hungarian government are still underway.
Taxes on Hungary’s telecom sector
Special telecom tax
Local carriers have been paying this sectoral tax since 2010, but it will be phased out as of 2013.
Telephone tax
Hungary’s Parliament approved a telephone tax to be introduced on 1 July 2012 without any date set for its phasing out. The tax is HUF 2 per minute for fixed-line and mobile voice services and also two forints per SMS and MMS. The tax was capped at HUF 700 per month for private individuals (one call number) and at HUF 2,500 for anyone else.
This year the telecom companies are subject to both the telecom sector levy and the telephone tax.
Utility infrastructure tax
As of 1 January 2013, the government will introduce a tax on utility infrastructure, i.e. on the owner of water, sewage, natural gas, heating, electricity and telecommunication pipelines and cables. When the owner is the state or a municipality, the operator will be subject to the levy. The tax will be HUF 125 per metre and will be payable in two equal instalments by 20 March and 20 September. In case of telecom cables the tax will be differentiated according to the length of the line. 20% of the full tax is payable on the first 170,000 metres, 40% between 170,000 and 240,000 metres, 80% between 250,000 and 300,000 metres and 100% over the part above the 300,000-metre mark.
