WORLD TRADE
ORGANIZATIONG/SCM/Q2/HUN/10
G/SCM/Q2/EEC/45
18 October 2004
(04-4384)
Committee on Subsidies
and Countervailing MeasuresOriginal: English
SUBSIDIES
Replies to Questions from the UNITED STATES1Regarding
the New and Full Notification of HUNGARY2
The following communication, dated 15 October 2004, is being circulated at the request of
the Delegation of the European Communities.
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Questions
Corporate tax concession for companies with foreign participation
Tax concession for dividend invested in Hungary by foreign shareholders
Tax concession in entrepreneurial zone
Tax concession related to regional investments
For each of the above programmes, could Hungary please provide additional
programme details, including (1) policy objective and/or purpose of the subsidy, (2) the
background and authority for the subsidy, (3) the form of the subsidy, and (4) how the subsidy
is provided.
Tax concession for investments exceeding 1 billion HUF
Tax concession for investments exceeding 3 billion HUF
Tax concession for investments exceeding 10 billion HUF
Are all industries in every sector eligible to receive the tax concessions for the above
programmes? Please describe in further detail all of the eligibility criteria for these tax
concessions.
Tax concession to promote structural adjustment
Tax concession for bank credits financing other investments
Tax rate relief for foreign investors
For each of the above programmes, could Hungary please provide the eligibility criteria,
policy objective and/or purpose and describe which industries benefit from these programmes?
1G/SCM/Q2/HUN/9
2G/SCM/N/95/HUNG/SCM/Q2/HUN/10
G/SCM/Q2/EEC/45
Page 2
Reply
As indicated in the last paragraph of the cover note of G/SCM/N/95/HUN in regard to
previously notified programmes only changes that occurred therein during the period covered by this
notification are indicated. Regarding the information requested by the US no modifications in the
support programmes notified for 2001 in G/SCM/N/71/HUN/Suppl.1 had occurred in 2002.
Accordingly for the answers please consult the new and full notification covering 2001.
Questions
Investment related tax concessions
Tax concessions in regions of high priority
Tax concession to promote investments in the production of exportable goods
Please confirm that the above programmes have been terminated? If so, have they been
replaced by similar programmes?
Answer
The Tax Concession to Promote Investment in the Production of Exportable Goods has been
terminated and has not been replaced by any new similar programme.
As to the Investment Related Tax Concessions and the Tax Concessions in Regions of High
Priority, these programmes are included in our notification (programme 5.11 and programme 5.12).
Question
Territorial Development Fund
1. Please describe in detail all of the eligibility criteria for these tax concessions. For
example, are the incentives contingent up exportation or on the use of domestic over imported
goods? Please provide details regarding any replacement programmes.
2. What types of industries benefit from this programme?
3. What type of aid (cash grants, soft loans, tax incentives or guarantees) is provided under
this programme?
Reply
Most of the information requested can be found under point 4.54.1 (“Assistance to territorial
development”) of the notification where the support programme for territorial development is
described which was the practice followed by the new and full notification of Hungary covering the
year 2001 (G/SCM/N/71/HUN /Suppl. 1). The content of point 7 should have been limited to a cross-
reference to this program just like in the preceding year.
As to eligibility criteria disadvantaged regions and areas can benefit from the assistance as a
rule. But other areas can also become eligible if investment is taking place within the framework of
the regional, territorial, county and small territorial development programmes or in an industrial park.
A self financing source ofG/SCM/Q2/HUN/10
G/SCM/Q2/EEC/45
Page 3
- 10 % for local government or non-profit organizations;
- 35% for small or medium enterprises;
- 50% for other organizations is needed.
Assistance is provided through tendering on central, regional and county levels. Eligibility
criteria relate to the financial stability of the applicant as well as deadlines for the realisation of the
investment project, the minimum period for employing additional work force or for providing
infrastructure services. There are no incentives contingent upon exportation or on the use of domestic
over imported goods.
Central Environment Protection Fund
What types of industries benefit from this programme?
Reply
In 2002 80,9 per cent of the support went to local governments, 2,9 per cent to national parks
and supervising authorities for environment protection, 3,5 per cent to NGOs, endowments, churches
and schools, 12,7 per cent to economic corporations.
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