A new tax regime and extended price cap regulations are aimed at addressing Hungary's high inflation rates and growing energy prices, while the economic prognosis for the autumn and winter seems gloomy, according to Nagy & Trocsanyi Managing Partner Peter Berethalmi.
"In Hungary, we had elections recently and a newly formed government now faces a severe economic situation, with high inflation rates, growing energy prices, and a shortage of raw materials," Berethalmi begins. "What’s even worse is that, at this point, we are preparing for a more challenging period over the autumn and winter."
"To address the situation, the government has put a number of measures in place," Berethalmi says. "For instance, a new tax regime is being introduced these days for the financial sector, airlines, pharmaceutical industry, telecommunications, retail industry, etc. The government explains that a special tax regime is needed to provide more money for those sectors particularly affected by the pandemic and the war in Ukraine, which are healthcare and defense." Therefore, he says, "the government claims that the business sectors that made an extra profit during the last couple of years are now taxed more heavily. This might be true about some sectors such as finance, but is questionable when it comes to airplanes." Berethalmi adds that "the affected sectors should not charge consumers for the increased taxes, otherwise they might face some kind of liability. However, this statement by the government is a bit vague and does not seem to include any legal possibilities for protecting consumers."
According to Berethalmi, Hungary, similarly to the rest of Europe, has seen increased energy prices. "The government’s policy is to keep energy prices low. Some companies are already paying much higher energy prices, while others enjoy some benefits and pay the same price as consumers," he notes. "Hungary got an exemption from the oil and gas sanctions and, consequently, we can freely import oil from Russia for the time being." According to him, "just a few days ago, to address increased energy prices and inflation in general, as well as the shortages of raw materials, the government extended price caps on certain products and fuel and the credit moratorium until the end of the year."
Berethalmi highlights that a new land registration act will come into effect in January, next year. "We don’t know all the specifics yet, but we know that the government aims to go digital and promote electronic communications rather than paper," he points out. "The act will also introduce a 3D map system, which is a quite modern approach. In addition, immediate land registration will be available with certain exceptions."
"Other than that, as a law firm, we had a slight shift towards litigation," Berethalmi adds. "Real estate, construction, FDI, and the banking sector still remain busy. Interestingly, if you look at foreign investments, Hungary became a pioneer in producing electric vehicle and battery components. There are many investors from China, Japan, and South Korea." According to him, "apart from having some large automotive manufacturing plants near Debrecen, a new development is being announced every month. We can only hope that the automotive industry won’t crash anytime soon."
