“A one-time tax is being levied on the banking industry equating to a rate of 0.19 of the tax base exceeding 50 billion forints (EUR 139.3 million); the revenue flowing into the budget as a result will be 55 billion forints (EUR 153.2 million), which will have to be paid in three instalments”, Minister of Finance Mihály Varga announced at a press conference in Budapest on Thursday.

The Minister emphasised that the Hungarian banking system is strong, its operations are stable, and 2019 was one of the most successful years for financial institutions operating in Hungary. “This creates a suitable foundation for enabling the banking sector to also undertake a role in the extraordinary burdens that have arisen during the current state of emergency”, he explained.

Financial institutions will have to fulfil this obligation using a separate tax statement, and payments must be made by 10 June, 10 September and 10 December. Mr. Varga highlighted that this sum will be returned to the banking system over the next five years as deductions from the bank tax, meaning it essentially equates to a one-time advance tax payment.

The Finance Minister recalled that during the restructuring of this year’s budget the government first established a 633-billion-forint (EUR 1.76 billion) fund for combatting the coronavirus epidemic, which includes the resources required for protection. This fund covers the cost of acquiring protective equipment, as well as the 500-thousand-forint (EUR 1400) monthly wage supplement for healthcare workers, amongst others.

“This is an open-ended target that can be exceeded if necessary; the government is assuring the funds required for patient care and protecting against the epidemic”, he emphasised.

“In the interests of assuring that this sum is continuously available, stable, secure and equitable resources must be allocated to back up this fund. Accordingly, the fund is being made up of existing reserves, 50 percent of party funding, taxes on multinational chains, and the payments being made by financial institutions, amongst others”, Mr. Varga said.

“The legislative amendments required for the performance of these obligations have been drawn up. The Cabinet has adopted the government decree on the measures required to reduce the negative budgetary effects of the coronavirus epidemic, has also made a decision on the special tax aimed at improving the budget balance, and has submitted a proposal to parliament on the amendment of the Contributions Act”, the Finance Minister told the press.

Mr. Varga thanked the banking sector for its constructive approach, which he said indicated that the Hungarian banking sector “cannot only be counted on in well-performing years, but also when there is a need for solidarity”.

President of the Hungarian Banking Association András Becsei said: “The banking sector is showing solidarity with all of society, and in addition to the annual taxes of some 100 billion forints (EUR 278.5 million), will also be paying the new, temporary tax”. “Even after paying these taxes, the Hungarian Banking Sector will remain capable of working in a stable manner, for which there is a great need in view of the fact that in a few months’ time financial institutions will be burdened with the extremely important task of boosting the economy”, he emphasised.