Hungary's "solidarity tax" to impact Richter

Leading Hungarian drugmaker Richter Gedeon says that the government's proposed fiscal measures will have an impact on the company's 2006 results. Specifically, it notes that the proposed act for a "solidarity tax," which targets the correction of the country's budget balance, will result in the company having to a a 4% tax on its pretax profits, with effect from September 1. In the event that the proposal is approved and implemented, it will affect the firm's 2006 results with a tax burden that will decrease net profit of around 600.0 million forint ($2.8 million).

Richter's results for 2006 could be further decreased by around 100.0 million forint if other restrictive measures of the "new balance" program (eg, the increase of the tax rate of benefits-in-kind from 44% to 54% and the maintaining of the employer's fixed social security contribution) are approved and introduced. On top of this, the firm is being obliged to lower drug prices under fixed-reimbursement measures (Marketletters passim).