Constitution Court annuls tax on stock of cash

Banking

Hungary's Constitution Court has declared unconstitutional a new tax on companies' stock of cash, the court announced on Monday.

The court said companies' stock of cash could be considered neither income nor assets. As a result of the decision, the law will not come into force. The law, approved by Parliament in July, was to have taken force on January 1, 2007. It was intended to have encouraged companies to keep no more than the necessary stock of cash on hand, thereby improving transparency. The law set the "necessary" amount of cash at 0.8% of total annual revenue at most, or at least Ft 300,000. Stock of cash in excess of either of these amounts was to be taxed at 20%. The law granted banks an exemption from the tax. The court decision does not affect a reduced 10% tax on cash taken out by companies in an effort to reduce their stock of cash. Finance minister János Veres said earlier that the stock-of-cash tax was expected to generate revenue of Ft 5 billion in 2008. The reduced tax on stock of cash was to have brought in Ft 10 billion. (Mti-Eco)

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