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2014 rise of transaction duty is only technical, govt official official says

The revenue target from a new financial transaction duty is higher for 2014 than for 2013 not because the government is planning to hike the tax, but because the December 2013 revenues from the duty will arrive in in January 2014, deputy state secretary at the Economy Ministry Ádám Balog told Thursday's Magyar Nemzet.

The 2013 budget bill before Parliament projects the transaction duty to bring in HUF 283 billion in 2013. The targeted revenue will rise to HUF 320 billion in 2014, but will, however stay there in 2015 and 2016 as well according to the bill.

Revenue from the extraordinary bank levy, levied on financial companies in 2010, will drop to HUF 72 billion in 2013, and will fall to zero thereafter, the bill shows.

The regulations on the transactions duty, may still change and MPs will take a vote on the respective bill before Parliament only after the government and the Hungarian Banking Association clarified all details, Balog said.

The new tax will amount to 0.1pc of the value of financial transactions according to the bill. The banks seem to be satisfied with that rate but insist on putting a cap on the tax payable after every single transaction. The ministry earlier suggested a limit of HUF 30,000 but banks would prefer a much lower cap, at around a few thousand forints.

The idea of setting different rates for different amounts for corporate clients or exempting certain transactions from the duty have also been raised, Balog said. To prevent tax evasion through transfers abroad, the ministry plans to introduce realistic, implementable tax rules, he said. He said there were methods to prevent tax evasion.

According to Wednesday's Napi Gazdaság business daily the government may find it hard to collect the tax when from July the domestic settlement system incorporates intraday bank transfers and switches to Single Euro Payments Area (SEPA) standards. Banks could then shift the management of forint accounts and settlements abroad. Larger companies would then be likely to relocate transactions outside Hungary to avoid paying the tax, Napi wrote.