New internet tax planned; other sectoral taxes to stay in 2015

Christian Keszthelyi

A new tax of between 4.5-6% will be charged on internet service providers while other sectoral taxes on banks, telecoms and advertisements will stay in place, according to Economics Minister Mihály Varga, who began describing detailed plans for next year's tax regimen at a press conference today.

As hvg.hu notes, the ruling Fidesz party, to which Varga belongs, had strongly criticized the opposition Socialist Party in 2008 when they suggested a tax of 0.8% on internet service providers. The Fidesz website even today still had the petition opposing such a tax, saying “levying a tax on internet is not only thoughtless, but clearly unnecessary and bad, as it further deepens the digital gap, excluding users from the internet,” according to hvg.hu.

The internet tax is expected to be an additional burden on telecoms, which already pay a special tax, and Varga raised the prospect of further special sectoral taxes. He said that the new cash registers, which connect directly to the tax authority, will be expanded beyond the retail outlets where they are now. He said this would be part of an overall effort to turn more businesses into legal and full taxpayers, as a way to increase government revenue.

Hungary's value-added-tax, already among they highest in Europe, would remain unchanged, but the VAT on pork, beef, sheep and goat meat would be 5%.

In general Varga promised to tax consumption more, while keeping labor taxes low.

The corporate tax rates of 10% for SMEs and 19% for big businesses will remain unchanged next year, Varga said. He said corporations that financially support higher education would get a tax break.

The government will submit the 2015 tax bill to Parliament on Tuesday, government spokesperson Éva Kurucz said.