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bne February 2021 Companies & Markets I 5
Due to its progressive nature, the windfall tax is targeted at multinational firms while local retailers (CBA, COOP) operating with a franchise model would be spared from the heavy burden.
The rate for turnover between HUF500bn and HUF30bn is 0.1%, between HUF30bn and HUF100bn is 0.4% and over HUF100bn turnover the tax rate is 2.5%.
The Orban government introduced windfall taxes for retailers in 2010 but was forced to withdraw it three years later after an infringement procedure by the EU. The case was brought to the EU court, which ruled in favour of Hungary. Of the top
“We are a country that exports raw materials and imports finished products”
ten retailers, only two are Hungarian-owned. The last few years had seen a surge of hard-discount chains. Aldi, Lidl and Penny had pursued an aggressive strategy in building up their market share.
German hard discount chain Lidl became the second-largest player in 2019 with a whopping 25% y/y increase in revenue to HUF685bn, which ranked it second behind market leader Tesco. According to the annual compilation of the 11 largest FMCG retailers by Trademagazin, the UK-retailer retained
its leading position with HUF740bn in sales last year down 2.8% from 2018.
Tesco had 112 hypermarkets, 35 supermarkets and 55 convenience stores in Hungary. Spar saw its sales rise 10% to HUF680bn. The two largest local retailers COOP and CBA were ranked fourth and fifth with annual turnover of HUF643bn and HUF538bn respectively, a modest 2.6 and 2.1% annual growth.
Analysts said that squeezing out multinationals would not solve efficiency problems faced by Hungarian retail chains. Employers would also feel the impact of a possible ownership change and possibly not to their advantage, a trade union leader said.
Lazar, a once-powerful member of the Orban government, has stepped back from national politics in 2018 after his unexpected loss at a mayoral by-election in his hometown of Hodmezovasarhely. He won his district in the 2018 parliamentary election. For a long time Lazar portrayed the image of being the "nice guy" of Fidesz, willing to accept criticism and ready for a compromise.
In rhetoric, he occasionally unleashed criticism of the government’s policies. He was appointed by Orban as commissioner for protecting non-smokers and earlier this year he was picked to lead the Hungarian Tennis Federation after a corruption scandal.
With such proposals many analysts say that Lazar is pursuing an ambition to make a comeback to national politics before the 2022 elections.
Hungary's largest bank merger granted exemption from competition scrutiny
Tamas Szilagyi in Budapest
The cabinet of Prime Minister Viktor Orban has declared the consolidation of three banks owned by the state or businessmen close to the ruling Fidesz party of national strategic importance, according to a decree published in the official gazette on December 10. The government has used that legal framework for more than 100 transactions, more than any other government in the past.
The status guarantees that the tie-up of MTB Magyar Takarekszovetkezeti Bank, MKB Bank and state-owned Budapest Bank will be speeded up and more importantly exempts the deal from competition oversight by the competition watchdog GHV.
Takarekbank Group, MKB Bank and Budapest Bank agreed
to transfer their shares to a joint holding company, Magyar Bankholding in late October.
The owners of MTB Magyar Takarekszovetkezeti Bank, the "central bank" for Hungary's integrated savings cooperatives, acquired a 37.69% stake in Magyar Bankholding; the owners of MKB 31.96%; and, the state took a 30.35% through investment fund Corvinus International Investment.
The future merger of the three banks will create the second- largest banking group in Hungary after OTP, although it will only be around a quarter of the size of CEE's largest lender with consolidated market value of HUF744bn (€2.1bn). Magyar Bankholding's balance is around HUF5.8 trillion compared to OTP's HUF22.7 trillion.
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