Hungary imposes windfall tax on drug producers to plug budget gap (updated)

Richter Gedeon Vegyeszeti Gyar Nyrt

24/12/2022 08:31

(Adds details, background)
       BUDAPEST, Dec 24 (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.  urn:newsml:reuters.com:*:nL2N2XI0BI
    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.  urn:newsml:reuters.com:*:nS8N2Y30GG
    ($1 = 376.5400 forints)
 (Reporting by Krisztina Than;
Editing by Andrew Cawthorne)
 ((krisztina.than@thomsonreuters.com;))