Márton Nagy would use administrative means to encourage domestic purchases: what does this mean in practice?

By: Trademagazin Date: 2024. 09. 13. 12:12

Minister of National Economy Márton Nagy is considering administrative steps to ensure that the Hungarian population prefers to spend its money at domestic rather than foreign-owned merchants – it was revealed from the minister’s interview with InfoRádio and from a chamber presentation, which was seen by Portfolio. The government’s goal is to strengthen the domestic economy by changing shopping habits and curb the significant amount of money flowing abroad.

Shopping tourism and online shopping: The growth of foreign spending

Purchasing food and other products from abroad is becoming more and more popular among Hungarians, especially along the borders, where shopping tourism has intensified due to persistent price differences. From the government’s point of view, this is problematic because the money spent abroad does not contribute to the growth of the domestic economy. Similarly, foreign companies such as Temu and Netflix, which do not have a Hungarian presence in the traditional sense, but earn significant revenues from the Hungarian market, are representing an ever-increasing proportion of online retail, reports G7.hu.

Based on last year’s data, Hungarian bank cards were used for HUF 1,888 billion in foreign online stores, and based on the growth rate of the first quarter of this year, this amount could reach HUF 2,400 billion this year. This could be around 12 percent of retail turnover, which is worrying for the government, as it means that significant money is flowing out of the country.

Possible directions of administrative tools

Márton Nagy’s goal is to ensure that the tax burden on foreign traders who sell in Hungary but are not legally present is the same as that of domestic traders. To this end, cross-border online trade may be subject to a special tax, as these companies do not pay corporate tax in Hungary. With this measure, the government wants to ensure that foreign traders also contribute to the Hungarian budget.