European Commission rejects Hungary’s reply to request to scrap telco tax

Banking

The European Commission has rejected Hungary’s response to a request to abolish a tax on telecommunications companies, business daily Napi Gazdasag said on Friday.

The paper learnt from the Foreign Ministry that the Commission had rejected Hungary’s argument that the tax did not fall under a European Union directive and thus did not go against EU rules.

The Commission asked Hungary to scrap the tax in September.

"The Commission considers this tax is illegal under EU telecoms rules because revenue from the taxes is used for the Government’s central budget and not for meeting the specific costs of regulating the telecoms sector," the body at the time.

The tax - between 0% and 6.5% of gross revenue, excluding VAT - was introduced in 2010 as one of three "crisis taxes" also levied on the retail and energy sectors.

The Commission’s request to Hungary to abolish the tax takes the form of a "reasoned opinion" under EU infringement procedures. Hungary now has two months to inform the Commission of measures taken to comply with EU telecoms rules. If it fails to do so, the Commission may refer Hungary to the EU’s Court of Justice.

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