June 30, 2014 / 3:25 PM / 5 years ago

Bertelsmann's Hungary unit says government out to destroy it

BUDAPEST, June 30 (Reuters) - Media giant Bertelsmann’s Hungarian business said on Monday the government was out to destroy it after an amendment submitted to parliament left it as the only company in the top bracket of a new advertising tax.

Since he took power in 2010, Hungarian Prime Minister Viktor Orban has clashed with his European Union partners and foreign investors over policies from media reforms to windfall taxes on specific sectors of the economy.

The advertising tax has prompted protests from Hungarian media companies and advertisers, which say it unfairly penalises them and threatens many with insolvency while doing little to improve Hungary’s state finances.

Media companies must pay a progressive tax of up to 40 percent on revenues above 20 billion forints ($88.40 million) per year.

In Hungary, the only company with that scale of revenues is RTL group, the Bertelsmann subsidiary that is the country’s biggest TV broadcaster.

“This law has nothing to do with proportional burden sharing or commercial television programming,” RTL said. “The goal of the law is clearer than ever: to leave no media in the country outside the influence of the powers that be.”

The government said the law was not aimed at any single company and would help ensure that everyone paid their share of tax.

The law passed earlier this month allowed media companies to partially offset their advertising tax obligations with losses earmarked in the previous financial year. That would have allowed RTL to pay a much smaller tax bill this year.

In the amended bill, Laszlo L. Simon, a state secretary at the Prime Minister’s office, proposed only unprofitable companies be allowed to apply the exemption. Because RTL made a profit in 2013, it would have to pay the tax after all.

The government also started a tax probe against RTL last week.

“To us, it was quite obvious that the legislature simply wanted to eliminate RTL and with it the freedom of press in Hungary,” the company said.

The government rejects accusations that it wants to curtail press freedoms. In an statement emailed to Reuters, the Economy Ministry said the tax was not aimed at RTL specifically.

“Introducing the advertising tax was obviously not determined by the results of a single company but a much more complex set of parameters,” the ministry said. “The rules of the advertising tax apply to all market participants.”

“The advertising tax and the amendment submitted today are necessary so nobody can avoid paying taxes in Hungary,” it said. ($1 = 226.2500 Hungarian forints) (Reporting by Marton Dunai; editing by Tom Pfeiffer)

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