In Hungary, under the Act on Telecommunications Tax, telecom companies are subject to a new tax calculated on the basis of phone calls initiated and messages (SMS, MMS) sent by their subscribers. The new act took effect on 1 July 2012. The tax is payable by the service providers and the tax base is calculated on the basis of the total time of calls initiated and the number of messages sent from the call number of the subscriber, or, in the absence of a subscription, the call number registered at the service provider. The tax rates are HUF 2 per minute started for initiated phone calls and HUF 2 per message sent.
The act prescribes different tax liability for private individuals and other taxpayers. For individual subscribers, a total of 10 minutes of phone calls initiated in a month will be exempt and the amount of tax payable on all additional calls is capped at HUF 700 per month. The act does not specify a similar exemption for other subscribers, but the amount of tax payable is capped at HUF 2,500 per month. Under the amendments adopted on 4 June, in the transitional period between the date the Act has entered into force and the end of the year, the caps are HUF 400 per month for private individuals’ subscriptions and HUF 1,400 per month for other subscribers’ subscriptions.
The Act exempts emergency calls, calls to fundraising numbers and test calls.
Since the tax is levied on service providers, they are required to declare and pay the tax by the 20th day of the month following the month of traffic (phone calls and messages) in question. However, as a temporary provision, the monthly return for July may be filed (and the amount of tax paid) by 20 September. The reason is because the legislator wanted to provide some time for the service providers to make the necessary changes to their systems.
Taking into account the current market structure, the wording of the act raises several questions. The question may arise in certain transactions as to who qualifies as the service provider and will hence be liable to pay the tax. It is also important to examine situations further in which the service provider passes the tax on to its customers from a VAT perspective.