Tax shock for Hungarian TV

June 4, 2014 05.05 Europe/London By Chris Dziadul

BudapestHungary’s two leading broadcasters RTL Klub and TV2 have expressed their shock at government plans to introduce a new advertising tax.

According to Portfolio, a new bill was submitted to parliament on Monday, June 2 by the ruling party Fidesz in what was the first economic policy of Prime Minister Viktor Orbán’s new cabinet.

It would see revenues, rather than profits, taxed from money generated from advertising.

The tax would be payable by media service providers whether they operate as a single entity or as associated companies, with rates varying between 0% and 40%, and come into effect on August 20.

TV2 believes that if approved the new advertising tax would have “unforeseeable consequences” for media businesses, especially for the television segment.

The broadcaster, which is 100% Hungarian owned, estimates that it would lose HUF1.6-1.8 billion (€5.3-5.9 million) in revenues each year.

RTL Klub meanwhile says the advertising tax is a brutal attempt by the government to incapacitate the largest medium of the country which “proved its independence of the parties and hence the government in the past 17 years.”

It adds that it would have to pay about 50% of the tax, which itself would have little positive impact on the state budget.

The proposed new law has also been criticised by the Hungarian Advertising Association (HAA), which said it would have a detrimental effect on the TV industry.