Hungary’s Largest Bank Slams “Populist” Tax Measure

by Ulrika Lomas, Tax-News.com, Brussels

21 September 2004

Hungary’s largest bank, OTP, has slammed the government’s decision to introduce a higher corporate tax bracket for financial institutions, warning the move could force it to concentrate on business outside of the country.

Branding the move as a “populist” measure by the government, the bank cautioned that it may be forced to lay off staff and pass on the increased costs brought about by the tax to its customers.

"The move increases the already significant country risk and could devalue Hungary in the eyes of investors," OTP said in a statement.

"The bank is considering that the development of the coming years should be made in areas and countries where the environment is more favourable and predictable," the bank added.

Finance Minister Tibor Draskovics announced last week that a plan will be presented to parliament to introduce a second corporate tax band of 24% for the banking sector, leaving the majority of the nation’s firms to pay income tax at the standard rate of 16%.

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