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Hungary strikes a deal with the EU

December 14th, 2022

In their first reactions, news outlets offer opposing evaluations of the deal reached on Monday, whereby the EU will lower the level of a proposed funding freeze in exchange for Budapest lifting its veto on two items.

The member countries cut back the sum of the frozen EU transfers to Hungary from €7.8 to €6.3 billion and accepted Hungary’s post-Covid Recovery and Resilience plan, which will allow Hungary access to an additional amount of €5.8 billion. For its part, Hungary agreed not to oppose the EU plan to take out an €18 billion collective credit to finance an aid programme to Ukraine (see BudaPost, November 17). The Hungarian government also abandoned its opposition to the 15 per cent minimum global corporate tax rate. The deal must be approved by the EU summit later this week, but that approval is generally taken for granted.

In its lead headline, Népszava describes the deal as a series of concessions by the Hungarian government. ‘The Orbán government gave in to all demands in order to accede to EU transfers, but couldn’t prevent the suspension of €6.3 billion,’ the left-wing daily writes. Katalin Halmai, Népszava’s Brussels correspondent, adds that Hungary is the first EU member country to be sanctioned for what she calls ‘systemic corruption”, as the actual disbursement of both sets of funds will be conditional on Hungary fulfilling 27 rule-of-law conditions.

Világgazdaság, on the other hand, characterises the agreement reached in Brussels as a victory for Hungary, because if EU requirements are met, Hungary will get access to the totality of the transfers destined for it. The business website also quotes from a leaked confidential document, whereby Hungary will not have to raise its 9 percent corporate profit tax, because the international partners accepted its local business tax (LBT) as part of the corporate tax. (The LBT amounts to a maximum 2 percent of the companies’ total turnover, depending on the decision of the local councils. Thus, in case of a 10 percent profit rate, for example, a 2 percent LBT rate would be counted as a 20 percent addition to the 9 percent corporate tax rate.)

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