Hungary: new tax on energy suppliers

Hungary
12/11/2008
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Energy suppliers face the prospect of a new temporary income tax under legislation passed by the Hungarian Parliament on 10 November 2008.

Unless vetoed by the Hungarian Head of State, a new 8% Energy Suppliers’ Tax will be levied from 1 January 2009 on top of existing income taxes, effectively increasing the nominal income tax rate for energy suppliers to 28%. The Tax is intended to be temporary and only to remain in force for two years.

The tax will be payable by:

  • Hydrocarbon exploiters
  • Producers and wholesalers of crude oil derived fuels
  • Natural gas traders
  • Electricity traders, and
  • Electricity generators except those feeding in electricity under the mandatory off-take regime, if the installed capacity of their electricity generating facility does not exceed 50 MW

Foreign businesses will only be liable to pay this tax on income attributable to their permanent establishments in Hungary.

The tax base will be similar to those for corporate income tax and solidarity tax, using pre-tax accounting profit but with fewer adjusting items. There will be no tax allowance for R&D expenses and no carrying forward of tax losses.

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