Richter, a Hungarian pharmaceutical company, said on Tuesday that it anticipates paying an additional 28 billion forints ($74.44 million) in taxes this year due to tax increases on large corporations implemented to close budget gaps.
The government of Prime Minister Viktor Orban declared on Friday that a windfall tax imposed on pharmaceutical companies based on net revenues in 2022 and 2023 would rise gradually, reaching 8% on net revenues exceeding 150 billion forints ($398 million).
Approximately 14% of Richter’s nine-month net profit, which more than doubled from the same period the previous year thanks to favorable exchange rate effects, will be taken as taxes in 2022.
By 8:25 GMT, shares of Richter had decreased by 4%.
In an effort to reduce the deficit, which is projected to reach 6.1% of GDP this year, Orban levied significant windfall taxes earlier this year on a number of industries, including banks, insurers, energy, and airlines.
Investors were alarmed by the move, which brought back memories of similar taxes that Orban, a populist, had used to balance the budget after he took office in 2010.
With inflation anticipated to increase to 26-27% in the upcoming months, Orban must control the deficit if he wants to prevent an economic downturn.
“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.”
(Adapted from Nasdaq.com)