By Margit Feher
BUDAPEST--Telecommunications and information technology firms
warned the Hungarian government Tuesday that planned tax increases
will threaten the development of broadband services and the
spreading of other new technologies in the country unless it
reverses its plan.
The unpredictable tax environment unfavorably affects the
companies' willingness to invest, the Association of Information
Technology, Telecommunications and Electronics Companies, or IVSZ,
said in a statement.
In the case of mobile telephony, the tax increase, if approved
by parliament, would considerably reduce the market value of the
frequencies the government plans to sell this year, IVSZ added.
Hungary's government said Monday that it will raise a special,
telecom-sector tax Aug. 1, which the companies are not permitted to
pass on to consumers. The increase is part of a set of tax measures
aimed at ensuring Hungary will continue to keep its budget
shortfall under European Union limits, the government said.
Under the measure, the government will raise the tax to 3
forints ($0.0138) a minute for phone calls, or per text message,
made by business customers, from the current HUF2. It will also
double the monthly tax ceiling to HUF5,000 per business customer.
The tax remains unchanged for nonbusiness customers.
The announcement of the planned tax measures surprised IVSZ's
members as the government hadn't consulted them prior to the
announcement, IVSZ said.
The tax increase would be the third major change in the tax
environment within a year, IVSZ said. Hungary has already imposed
two separate telecom-sector specific taxes on fixed-line services,
and the taxation of the mobile sector has been exceptionally high
in international comparison for several years, IVSZ said. According
to a survey by advisory firm AT Kearney conducted in May 2013,
taxes, levies and other government dues account for 40% of the
average cost of a telecom minute in Hungary, the highest in Europe,
IVSZ added.
IVSZ is urging a tax policy that supports dialogue,
predictability, and competitiveness, and "hereby requests the
withdrawal" of the planned tax increase, the association said.
Hungary's largest telecommunications companies include Magyar
Telekom Nyrt. (MTELEKOM.BU), a unit partly owned by Deutsche
Telekom AG (DTE.XE), and the local arms of U.K. firm Vodafone Group
PLC (VOD), and of Norway's Telenor ASA's (TELNY).
Write to Margit Feher at margit.feher@dowjones.com
