HUF 28 Bn Special Tax by Gedeon Richter in 2022

The Hungarian pharmaceutical giant Gedeon Richter Plc. has published an extraordinary announcement on the website of the Budapest Stock Exchange that under a new government decree on the extra profit taxes, the magnitude of supplementary pharmaceutical tax payable by the company for the year 2022 is expected to be approximately HUF 28 billion.

“On June 4, 2022 the Government of Hungary issued a decree (Government Decree of 197/2022. (VI.4.)) imposing new taxes on a number of industries, which has been extended on December 23 2022 to the pharmaceutical industry (Government Decree of 582/2022 (XII.23.). The extraordinary pharmaceutical tax is levied on the actual business year’s annual net sales of pharmaceutical products and active pharmaceutical ingredients as defined by the Local Tax Act and is payable for the years 2022 and 2023,” the statement says.

Under the terms of the decree the expected magnitude of supplementary tax payable by the Company for the year 2022 is approximately HUF 28 billion. The tax is expected to be accounted under ‘Other expenses’, thus will proportionally lower the company’s operating profit and free cash-flow for 2022. Other elements of financial targets set for 2022 and released in the public domain are kept unchanged, the company points out.

UPDATE:
As a consequence of the amount of taxed levied on the company by the government, the price of Richter shares fell by HUF 530, or 6.02% on Tuesday, to HUF 8.270, with a turnover of HUF 3.9 billion.