The Parliament has adopted the bill on levying tax on public utility pipelines and cables thus contributing to fiscal stabilization parallel to enforcing more proportionate burden-sharing.

Due to the increased liabilities of utility service providers, in the future the below 3 percent central budget deficit will remain sustainable and the Government can secure the long-term decline of the general government-to-GDP ratio.

The owners of public utility pipelines and/or cables will be subject to paying the tax. Public utility pipelines and/or cables are qualified as those providing services for consumers regarding water supply, sewage and rainwater drainage in municipal areas; natural gas-, heating- and electricity services and temporary or permanent telecommunication which are laid

• (underneath or above) within municipal areas, or

• (underneath or above) non-municipal areas.

The regulation makes an exception of pipelines and/or cables laid within municipal areas or areas which do not qualify as municipal serving exclusively the consumption needs and wants, related to the usage of that particular area, of those entitled to using the site of a certain topographical lot number.

Pipelines and/or cables, laid within municipal areas or areas which do not qualify as municipal which serve exclusively the consumption needs and wants of those entitled to using the site of a certain topographical lot number which are related to the usage of that particular area, are not subject to tax.

In accordance with this provision, the tax is not applicable to section(s) of pipelines and/or cables, branching off the main system which only connect(s) with the consumer of a particular site, irrespective of whether the section is within a municipal or non-municipal area.

As the public utility tax is payable annually, events relevant from the aspect of tax liability (commencement, termination or any change regarding tax liability) shall be related to the first day of a calendar year, to 1 January.

The taxpayer shall be the legal or natural person who is the owner of the public utility pipeline or cable on the first day of the calendar year which usually is the public utility service provider. In case of more than one owner, individual owners are liable to pay tax according to their share of ownership of pipelines and/or cables at issue.

The public utility tax is based on the length in meter of a public utility pipeline and/or cable laid at a municipal area or, in exceptional cases, private property. In case the taxpayer possesses the ownerships rights of more than one pipeline and/or cable for identical purposes on the same line, the length of line shall only be calculated once, irrespective of the number of pipelines and/or cables, for determining the tax base.

The payable tax shall equal the tax base (i.e.: length of pipeline(s) and/or cable(s)) multiplied by 125 HUF.

The Hungarian state and local governments are exempt entirely of paying the tax.

Owners of telecommunication cables are entitled to tax relief depending on the length of their lines. According to the regulation, the longer the cable the smaller the utilizable tax relief.

(Ministry for National Economy)