VAT on Internet services lowest in Hungary

From 1 January in Hungary the rate of Value Added Tax on Internet services is the lowest in the whole of Europe after Parliament, at the Government’s initiative, reduced it in two stages, first from 27 to 18 per cent, and from 1 January 2018 to 5 per cent, the commissioner appointed by the Prime Minister to oversee the Digital Welfare Programme stressed at his press conference.

Tamás Deutsch highlighted that at the beginning of last year VAT on Internet services decreased from 27 to 18 per cent, and in consequence, prices fell by some one fifth over a period of 13 months.

“We managed to implement a very significant reduction in digital household utility charges”, he stated.

The same as last year, “the reduction of VAT will manifest itself in price reductions down to the last penny” also this year, he said.

The Prime Minister’s commissioner observed that on auditing more than four hundred local Internet service providers in 2017, the National Media and Infocommunications Authority only found in the case of two smaller companies that this was not so.

Mr Deutsch stressed the goal of the Government is to make faster, more accessible, more affordable and better Internet services available to citizens and businesses than at any time before.

He added that to this end free broadband Wi-Fi services will be available in at least one public institution as well as on the public premises of every settlement by the end of this year, while as part of another measure serving the attainment of this goal, the Government is seeking to ensure that superfast Internet connections with a minimum speed of 30 megabits should be available in every local household by December 2018, two years before the EU target.

The commissioner also said that service providers joining the Digital Welfare Programme launched by the Government agree to offer solutions priced minimum 15 per cent below their earlier cheapest service packages in order to provide access to Internet services for people who could not afford them before for financial reasons.

As he said, as a result of these measures, already in 2018 the percentage of those regularly using the Internet in Hungary may reach more than 80 per cent, a rate in excess of the average of the European Union. Mr Deutsch stressed that

last year’s Internet VAT reduction left HUF 13 to 15 billion in the pockets of citizens and businesses,

but the rise in the number of consumers using Internet services kept tax revenues related to those services at the same level.

By the politician’s account, the next round of VAT reduction will offer members of the public and businesses savings worth some HUF 22 to 23 billion, meaning that savings over a period of two years may reach HUF 35 to 40 billion in total.

He also indicated that there are extensive mobile Internet developments under way in Hungary, and as a result, the country is doing much better in this department than in the field of its general state of economic advancement.

Mr Deutsch highlighted that these days it is impossible to identify and implement realistic development programmes in a single area of life which do not at the same time involve the development of the state of digitisation; “digitisation is a pledge of the successful development of the economy”.

As we wrote few weeks ago, Google published the top list of Internet search trends in 2017. An article collected the top Google searches of Hungarians, although they find it quite suspicious since it does not contain any 18+ content. Read more HERE.

Source: MTI; kormany.hu