Advertising Association fears tax may kill billboard business

Banking

The Hungarian Advertising Association (MRSZ) says the special tax on advertising in public spaces and the tightening of the law on protecting the urban landscape are incompatible with EU law and will kill the outdoor advertising market, crippling hundreds of firms and destroying the livelihoods of thousands, according to a Tuesday report on online news portal index.hu.

The government submitted a bill - duly passed by Parliament on Monday in a package also including a flat corporate tax and payroll tax reduction - stating that a special tax must be paid by advertising firms on billboards and other outdoor advertising. The bill allows local governments to decide on the scale of the annual tax, which the bill caps at HUF 12,000 per square meter.

The association argues that the new tax would entirely obliterate any profit firms could make on outdoor advertising, while noting that certain companies owned by figures close to the government could be exempt from the tax, says the index.hu report.

The MRSZ claims that the special tax violates EU rules on state support, providing a discriminative and selective advantage to certain media companies. Other players on Hungaryʼs outdoor media market, it argues, could be put at a serious disadvantage, with advertisers forced to turn to the global online advertising market. For this reason, it adds, the tax represents a competitive disadvantage for domestic firms competing with the global players that dominate the online market.

Index.hu cites the association as stressing that outdoor advertising firms pay the same advertising taxes as other players on the market, and pay the same fees to local governments for the placing of advertising in outdoor spaces as any other company using public space. The scale of the new tax, however, is so high as to render outdoor advertising unsustainable, and consequently the MRSZ is asking the government to continue the dialogue it has begun with representatives of the profession.

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