Hungarian tax authority to examine RTL Klub transaction

Banking

National Economy Minister Mihály Varga announced on Wednesday that he had instructed Hungary's Tax and Customs Authority (NAV) to launch an investigation without delay of commercial television-station RTL Klub in order to determine if the station made a "fictive transaction" "over recent years" aimed at averting taxation.

Varga said that NAV would investigate the transaction to find out if it was intended solely as a means of reducing tax payments, and making use of tax preferences. He noted that he had examined this issue pursuant to a request from the parliamentary group of the governing Fidesz party.

The Fidesz parliamentary group claimed last week that RTL has not paid corporate tax in recent years as a result of "accounting tricks" despite having pre-tax profits of billion forints.

Varga said today that following the adoption of the advertising-revenue tax it became clear that "there are some players who do not want to assume their fair share of the public burden."

RTL Klub has been broadcasting negative news connected to Fidesz and the government of Prime Minister Viktor Orbán since parliament on June 11 approved the ad tax that imposed a progressive tax on advertising revenue. Non-government sources have estimated that RTL Klub, itself, alone would pay over 60% of all budget revenue stemming from the tax in 2014. Under a last-minute amendment, however, this year's tax base can be reduced by 50% of losses deferred from earlier years. The amendment was criticized by opposition parties, who said it favored pro-government commercial television channel TV2.

RTL Klub is a member of the Luxembourg-based RTL Group, 75% of which is under the ownership of the German mass-media corporation Bertelsmann.

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