Deutsche Telekom: Croatian government seeks to pull contentious mobile tax
27 October 2011
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The Croatian government proposed that its controversial ‘crisis’ tax on mobile services will be abolished from the start of 2012 — potentially offering a rare boost to Deutsche Telekom (DT) in its struggles with financial-pressed governments in southern and eastern Europe (Deutsche Telekomwatch, passim).
The plan, which requires parliamentary approval to go through, would see the 6% fee no longer applied from 1 January 2012. Martina Dalic, Croatia’s Minister of Finance, acknowledged the levy had had some negative impact on the mobile sector’s development, reportedly telling a cabinet session that “one of its consequences was a reduction of investments in the telecom industry”.
“ Scrapping the tax paves [the] way for lower prices and more investments in this area. ”
– Dalic.
The tax, which is deducted directly from operators’ revenue, was first introduced in Croatia as an “anti-crisis” measure in August 2009. However, Hungary’s Hrvatski Telekom (HT) and rivals have regularly complained that it has hurt their ability to invest and lower prices. HT claimed the charge had an “impact” of HRK 71m (EUR10m) on its turnover for the first half of FY11 (January-June 2011).
The levy has also formed part of a wider range of governmental and regulatory difficulties that have afflicted DT’s contracting Europe operating division — DT recently said that both it, and Hungary’s subsequently introduced ‘crisis’ tax on energy, telecoms, and other players, “continue to reduce revenue and earnings, and limit investment potential” in the two countries (Deutsche Telekomwatch, #1 and #3).
Hungary’s government is currently enmeshed in a legal dispute with the European Commission over the legality of its tax (see separate report), while Croatia is preparing for European Union membership in July 2013.
[Further reference: Croatia hope to scrap mobile telephone tax -- Reuters, 13 October 2011; Hrvatski Telekom D.D. mobile services fee -- HT, 14 October 2011.]
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