On 11 July 2011 the Hungarian Parliament accepted the proposed legislation on the so-called public health product fee, usually referred to as “chips tax”. The fee targets food and beverage products which are considered unhealthy. The new act will enter into force on 1 September 2011.
The subject matter of the act is domestic sale of products with a certain content of sugar, salt and caffeine. The list of concerned products includes inter alia fruit juices sold as pre-packaged products (if their fruit content does not reach 25 %), soft drinks, energy drinks, prepackaged confectioneries, biscuits, ice-cream, other foodstuffs containing chocolate and cocoa as well as food flavoring and stock-cubes, if their content of sugar or salt exceeds the statutory limit.
The tax will be payable either by the:
- individual or company selling the product in Hungary for the first time;
- manufacturer, if the product is manufactured in Hungary; or
- first domestic seller, in case of importation of a foreign product to Hungary.
The tax will be payable even if the actual individual or company does not sell the product directly to the final consumer.
The rate of tax rate will be:
- for soft drinks HUF 5/liter (approx. EUR 0.02/liter);
- for energy drinks HUF 250/liter (approx. EUR 0.94/liter);
- for prepackaged confectionaries HUF 100/kg (approx. EUR 0.4/kg)
- for snacks HUF 200/kg (approx. EUR 0.75/kg);
- for stock cubes HUF 500/kg (approx. EUR 1.9/kg).
The seller is exempt from the obligation to pay the public health product tax, if he sells less than 50 liters / 50 kilograms of the concerned product aggregately in one calendar year. Foreign sale is also exempt from the tax provided that further provisions of the new act are complied with.
Further exemption applies regarding products subject to re-sale in foreign countries provided that the purchaser issues a declaration on this fact at the time of the sale and is able to credibly prove the re-sale of the products also indicating the quantity of the actual products.
The Government expects that the new tax will increase state revenues in the public health budget and make Hungarian people live healthier.