BUDAPEST (Reuters) – Hungarian drugmaker Richter expects to pay about 28 billion forints ($74.44 million) worth of extra taxes this year, it said on Tuesday, hit by tax hikes on big businesses to plug budget holes.
Prime Minister Viktor Orban’s government announced on Friday that a windfall tax imposed on drug producers based on net revenues in 2022 and 2023 would increase progressively, rising to 8% on net revenues exceeding 150 billion forints ($398 million).
The 2022 tax take represents some 14% of Richter’s nine-month net profit, which more than doubled from the same period a year earlier, boosted by favourable exchange rate effects.
Richter’s shares were down 4% by 0825 GMT.
Orban earlier this year imposed big windfall taxes on a range of sectors including banks, insurers, energy and airlines as the he tries to narrow the deficit, which is expected to hit 6.1% of GDP this year.
The move rattled investors and brought back memories of similar taxes that the populist Orban had used to fix the budget after he came to power in 2010.
Orban needs to rein in the deficit and avoid recession in the economy, with inflation expected to accelerate to 26-27% in coming months.
“The tax is expected to be accounted under Other expenses thus will proportionally lower the Company’s operating profit and free cash-flow for 2022,” Richter said in a statement.
“Other elements of financial targets set for 2022 and released in the public domain are kept unchanged.”
($1 = 376.15 forints)
(Reporting by Anita Komuves, Editing by Louise Heavens)
