On the night of December 23, the Hungarian Gazette was published, full of new laws and regulations. One of them is a government decree amending the extra profit tax decree to impose a special tax on pharmaceutical manufacturers in proportion to their turnover. Another regulation increases the tax on insurance companies.
The latest extra tax on pharmaceutical manufacturers in Hungary will bring HUF hundreds of billions to the state budget next year, according to a quick calculation by portfolio.hu, indicating that there is a real problem in the 2023 budget, which the government is now modifying. The financial portal notes that previous similar special taxes have been paid for in part or in full by the public, and the higher burden can now be expected to be passed on to manufacturers, which means rising drug prices.
The new special tax, like the other sectoral taxes, will be banded. The statutory tax rate is the net turnover as determined on the basis of the annual accounts for the tax year, so net turnover will be reduced by the revenue from royalties and this reduced consolidated turnover will be the basis for the special tax.
According to the text of the decree, the amount of the new tax, which manufacturers will pay on their turnover in 2022 and 2023, will be paid into the budget in 2023 (once by 20 May and then by 20 November). The decree states that net turnover will be reduced by the revenue from royalties and that this reduced consolidated turnover will be the basis for the special tax: 1% on the part not exceeding HUF 50 billion, for the part exceeding HUF 50 billion but not exceeding HUF 150 billion, 3%, and for the part exceeding HUF 150 billion, the tax is 8%.
As for insurers, under the regulation that increases their taxes, they will have to pay 12% instead of 7% on the part of their premium income exceeding HUF 36 billion, and 5% instead of 3% for life insurance.
The regulations, published on Friday night, entered into force immediately, on Saturday, December 24.
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