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Hungary to tax offshore assets

January 19th, 2013

A pro-government columnist welcomes the government’s plans to tax Hungarian deposits abroad. Left-wing and liberal commentators believe that the proposed tax is just a populist rhetorical stunt, rather than an effective measure to close tax evasion loopholes.

The Hungarian government plans to collect data on the bank accounts of Hungarian citizens and companies in offshore tax havens, including Switzerland and Cyprus. János Lázár, head of the PM’s office said that the aim is to levy a 35 per cent tax on those deposits. As a first step, he said Hungary will ask Switzerland to provide information about the deposits of Hungarian nationals in Swiss banks. From 2010 to 2012, the government opened up the possibility for Hungarians to repatriate their offshore assets by paying a 10 per cent reduced tax rate, but only 67 billion Forints were returned in this way. The Ministry of National Economy estimates that 1,500 to 2,000 billion Forints are deposited in foreign bank accounts.

The Hungarian government’s efforts to tax assets in offshore tax havens mirror the policies of several European countries and the US, Anna Szabó writes in Magyar Nemzet. The pro-government columnist remarks that Switzerland has recently agreed to retroactively tax the assets of Austrian, German and British citizens in Swiss banks. Szabó believes that closing the tax loopholes available for the wealthiest is absolutely reasonable and completely in-line both with basic principles of fairness as well as popular expectations in time of severe economic crisis. She hopes that the European Union will in the future be more attentive to the demands of its citizens, and will step up efforts against offshore tax havens used to siphon money from European countries.

Instead of trying to spy on Hungarians who keep their savings abroad, the government should ask itself why its citizens do not feel secure to deposit their money in Hungarian banks, Miklós Bonta comments in Népszava. Bonta notes that interest rates are very low in Switzerland, and thus account holders cannot expect windfalls on their deposits. Bonta, however, welcomes the fact that the government wants to go after tax evaders, but believes that the taxation of deposits abroad is a populist stunt, since Switzerland and other tax havens will not share information on their account holders.

Heti Világgazdaság points out that Hungarian deposits in Switzerland have been taxed under an EU directive since 2005, and 75 per cent of the 35 per cent witholding tax levied on the yields of Hungarian accounts is transferred to the Hungarian government. The left-wing liberal weekly also notes that the government could expect only to get data on account holders who are suspected of tax evasion, but it is highly unlikely that Swiss banks would share information on all Hungarian accounts irrespectively. Heti Világgazdaság contends that the real reason for the proposal is to continue a symbolic battle against opposition politicians and András Simor, head of the National Bank, who have been accused by Fidesz of evading taxes by registering companies in offshore tax havens.

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