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Hungarian Government To Reduce Tax Burden On Banks In Exchange For Increase In Lending Activity

By Tamás Székely // 2015.06.15.

New tax regulation will enable some 40 percent of Hungarian banks to pay less tax, as the government incentive leaves altogether HUF 10 billion (EUR 32m) at active lenders, the Economy Minster told economic daily Napi Gazdaság. Mihály Varga said the banks will be interested to lend more and more, and the upcoming lending competition will boost business loans too.

According to the amendment submitted as part of the tax package for the 2016 Budget Bill, lenders with a higher stock of corporate loans compared to 2009 are entitled to reduce their tax base. The Economy Minister pointed out that the amount of HUF 10 billion per year is projected to remain the same in the coming years as bonus for active lenders. Banks that increase their lending activity throughout the upcoming period will eventually also be eligible for the tax credit, he added.

Speaking of the expected impact of the measure, the Mihály Varga said the new rules on bank taxes are seen to have a multiplier effect on the economy. The amount deductible from tax will be proportionate with the bank’s stock of corporate loans. This is expected to generate lending competition and after a while the resources channelled into the economy will far exceed the amount of tax revenue loss, Mihály Varga explained.

via and photo: Zoltán Tuba –