EC to start infringement procedure over Hungary's telecom tax.

By bne IntelliNews March 16, 2011
The European Commission initiated the first stage of EU infringement procedure, by requesting additional information from Hungary on the extraordinary telecom tax the country introduced in October 2010, the EC said in a statement on its website. The authority doubts that the tax levied on telecoms in an attempt to boost state revenues might be incompatible with EU rules, which require specific charges on firms in the sector to be directly related to covering the costs of regulating the telecommunications sector. The extraordinary telecom tax rate varies from 0% to 65% of the company's gross revenue. The first payments were due in December last year and the new taxes are expected to generate budget revenue of around EUR 220mn per year. Hungary should reply to the information request in two months. If the country does not reply on time or if it provides an unsatisfactory answer, the EV will make a formal request to the member state, asking it to remove the existing infringement within a specific time limit. Hungary's government applied special taxes also on the retail, finance and energy sectors. The Commission has also decided to refer France and Spain to the EU Court of Justice concerning similar telecom taxes.

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