Economy
Hungary: foreign companies will regret it if they complain to EU over taxes
- The FT article published on Sunday does not contain lots of new information compared to what we have known so far about this issue. It practically sums up the disputes and different stages of the “war" the Hungarian government has been waging with broadcaster RTL Klub, tobacco producer Philip Morris and retail chain Spar. It said the cabinet is changing the rules of the game as it sees fit, discriminating primarily against large foreign-owned multinational companies. It said “Hungary has escalated its battle with the European Commission and foreign companies, threatening businesses that oppose the government’s alleged discriminatory taxes with additional penalties."
- The FT cited János Lázár, cabinet chief for Prime Minister Viktor Orbán, as telling journalists last Thursday that it is Spar and Philip Morris are behind the two separate in-depth investigations the EC has launched into Hungary’s tax system. “We can say to Spar and to Philip Morris that if you won’t pay this tax, then you’ll pay another, but one way or another, you’ll pay," the FT cited him as saying. “You can go complain to the EU, but then you’ll just pay more. And it’s going to be this way for every group that presses charges against a country where it wants to earn money," he added.
- In the latest cases, Brussels said it was not disputing Budapest’s right to introduce taxes, but rather the steeply increasing rates that apply to larger, predominantly foreign companies, such as Philip Morris International, Imperial Tobacco and Spar, the FT said. The Commission has also issued an injunction to prevent the government from collecting the taxes. The EU executive said Hungary had provided no objective reason to discriminate between companies based on turnover. Brussels said in a statement it supported attempts to reduce tobacco consumption but it “had doubts that the effects of tobacco products on public health increase progressively with the turnover of companies selling them."
- The FT added that according to PM Orbán’s critics, the disputes are “further evidence that Hungary’s growth potential is being diminished by an unpredictable regulatory environment and punishing sector taxes that deter foreign investors."
