EU Commissioner for Economic and Financial Affairs Pierre Moscovici has requested that the Hungarian government postpones its planned 9% internet VAT reduction, due to be implemented on 1 January 2017, reports Budapest Business Journal, citing Minister of State for Government Communications Bence Tuzson. Moscovici reportedly said he supports Hungary’s move to foster digitalisation and noted that while EU regulations do not currently list internet services among the products that may have a preferential VAT rate, the European Commission (EC) does aim to change the related directive and introduce more flexible regulations. With the changes expected to take some time, Moscovici has asked that the Hungarian government delays its tax reduction plans. With the Hungarian parliament having approved the VAT cut in June 2016, however, Tuzson has said Hungary will fight further to implement the tax reduction by the start of next year.
As previously reported by TeleGeography’s CommsUpdate, Hungary intends to cut the VAT rate applied to internet subscriptions from 27% to 18%, with the 9% reduction only to be applied to telcos involved in the deployment of an ‘ultra-fast’ broadband network; it was previously expected that the government would inject HUF150 billion (USD550.9 million) to boost the deployments.