Taxation – the Government clashes with the domestic media industry

The taxation regarding advertisements is about to go through a huge change, wherefore media companies are rather unhappy.

Brandtrend.hu writes that the Government submitted a law plan on March 29, based on the resolution of the European Committee (November 4, 2016) and the injunction of the European Jury (March 24), by which the current 5.3 per cent advertisement tax will be modified to 0 per cent in the period between January 1 and May 31, 2017. However, the modification does not end there, as the tax will be increased to 9 per cent from June 1.

The Hungarian Advertising Association (MRSZ)  and its co-associations strongly claim that the ad tax should be ceased, for it is harmful for the industry and for the whole Hungarian economy, which is apparently proven by an impact study of the Association. They also suggest that, by this move, the Government takes away the industry’s opportunity to expand. Furthermore, it also endangers the viability of the industry, as it provides competitive advantage to the global participants.

According to the study of PwC (2016), the advertising spending per person in the country drags far behind the regional average and also from the average of the 28 countries that were analysed. Besides, the study showed that advertisements greatly add to the economic performance of a country. And the Hungarian media companies seem to be unable to cope with a 9 per cent tax, so this new system would result in an artificial price increase, paid by the firms advertising products and services, hence the consumers would also be affected.