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  4. Hungary imposes windfall tax on drug producers to plug budget gap
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Hungary imposes windfall tax on drug producers to plug budget gap

BUDAPEST (Reuters) -Hungary's government has imposed a windfall tax on drug producers based on net revenues generated in 2022 and 2023, as it tries to plug holes in the state...
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Hungary imposes windfall tax on drug producers to plug budget gap © Reuters.

BUDAPEST (Reuters) -Hungary's government has imposed a windfall tax on drug producers based on net revenues generated in 2022 and 2023, as it tries to plug holes in the state budget.

According to a government decree late on Friday, the rate increases progressively, and will be 8% on net revenues exceeding 150 billion forints ($398 million).

Companies must pay the new tax for both 2022 and 2023 next year, as the government tries to narrow the deficit, which is expected to hit 6.1% of economic output this year.

Nationalist Prime Minister Viktor Orban earlier this year imposed big windfall taxes on a range of sectors including banks, insurers, energy and airlines.

That rattled investors and recalled memories of similar taxes that the populist Orban had used to fix the budget after he swept to power in 2010.

Orban needs to rein in the deficit and avoid recession in the economy, with inflation expected to accelerate to 26-27% in coming months.

The decree said the new tax will be 1% on net revenues below 50 billion forints, and 3% on the part of revenues between 50 billion and 150 billion, jumping to 8% on net revenues exceeding 150 billion forints. Hungary's largest pharma company Richter will be especially hard hit by the new tax.

($1 = 376.5400 forints)

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