HUNGARY: "Crisis tax" paid by insurers, the heaviest burden on the industry

28 October 2011 — Daniela GHETU
HUNGARY:
ungaria"The biggest problem facing the insurance sector is the lack of growth, and the inability of insurance companies to increase their revenues", MABISZ Chairman Peter KISBENEDEK said on Wednesday, at the Conference organized by the association, citing among the main reasons of this situation the about EUR 126 million crisis tax paid by insurers.

In an effort to replenish empty state coffers, the Hungarian Government introduced last year a set of "special taxes" on banking-insurance services, all retail stores, telecommunication and energy distribution activities. Aiming to collect over EUR 700 million a year, the first "special taxes" were levied on banks and insurance companies in the 2010's summer, calculated as a share of their assets.

"Companies of the finance industry are levied with a crisis tax of EUR 735 million, EUR 602 million of which are to be borne by banks and EUR 133 million by insurance companies, which represents about 50% of this industry's pre tax profit. The assessment basis for banks is the balance sheet volume 2009 and for insurance companies the turnover 2009 (i.e. for Non-Life insurance 6.2% of net premium earned)", states a joint letter sent to European Commission by AEGON N.V., ALLIANZ SE, AXA, bauMax AG, CEZ a.s., EnBW AG, E.ON AG, ING Group, OMV AG, REWE Group, RWE AG, SPAR ?sterreichische Warenhandels AG and DEUTSCHE TELEKOM AG in December 2010, some of the most important investors in Hungary.

Confronted with the insurers' concerns at the MABISZ Conference, Prime Minister Viktor ORBAN commented: "It is nonsense to say that that the Government is against banks or credit and insurance companies", and added that "if the economy grows stronger, then financial institutions and insurance companies will play a big role".

According xpatloop.com, the MP's statement came also as a response to the MABISZ representatives which suggested that in order to encourage the industry's development "life insurance policies should enjoy the same tax benefits as other investments of more than five years".

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