Govʼt to cut transaction duty for banks if lending increases
The Hungarian government is willing to cut the transaction duty if the volume of banksʼ corporate loans increases by at least 20%, Minister for National Economy Mihály Varga said at Deloitte Hungaryʼs "Economic Growth and Competitiveness" conference in Budapest Thursday, Hungarian news agency MTI reported.
Such a reduction would obviously have an upper limit, the minister stressed, adding that the government will consult the Hungarian Banking Association on the matter.
In a statement released early Thursday afternoon, the Ministry for National Economy said that, based on a package of tax amendments passed by Parliament on November 22, the transaction duty will be lowered for financial institutions that increase their lending by more than 20% in a two-year comparison, initially by the end of 2017 compared to the end of 2015.
The discount will be available from January 1, 2017, based on the planned increase in the volume of receivables.
The extent of the reduction will be 0.6% of the increase in the lending stock, but the amount cannot exceed 80% of the transaction duty payable on the tax year, or HUF 300 million.
As banks must pay a transaction duty on repayments made by debtors and lending is essential to boost economic growth, it is appropriate to exempt lenders from part of the transaction duty, the ministry said.
Next yearʼs Central Budget Act targets HUF 205.7 billion revenue from the transaction duty, or 1.8% of all central budget revenue. Credit institutionsʼ gross lending stock stood at HUF 16,339 bln at the end of 2015, figures from the National Bank of Hungary show.
The duty, levied on most bank transfers and cash withdrawals, was introduced at the beginning of 2013. At present the rate is 0.06% on cash withdrawals, and 0.03% but no more than HUF 6,000 on most other transfers.
Varga said at the conference that the ministryʼs calculations show growth is likely to remain slightly below 2.5% this year.
Government debt as a percentage of GDP could fall under 74% this year, the minister added.
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