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The United States has decided to denounce the tax treaty with


Photo by Karolina Grabowska on Pexels

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The United States has announced that it has decided to denounce the tax treaty with Hungary, a decision that comes after Budapest blocked the implementation by the European Union of a minimum tax rate of 15% for multinationals, informs DC Business.

A spokesman for the Treasury Department explained the decision by saying that Hungary has reduced its profit tax to 9%, compared to 21% in the US, which disadvantages the US, according to the economic publication ZoneBourse.

“The benefits are no longer reciprocal, with a significant loss of potential revenue for the United States,”

the Washington official explained.

However, a number of analysts believe that the announcement made by the US Treasury, which should take effect within six months, seems more like an attempt to put pressure on the Budapest authorities than a firm intention. Prime Minister Viktor Orban simply wants to accept the implementation of the 15% minimum tax rate.

“Hungary has raised concerns with the US government by blocking the EU’s Global Minimum Tax Rate Directive,” the spokesman said. “If Hungary applied this minimum quota, the agreement would be less unbalanced”,

he added.

Hungary’s central bank increased its interest on deposits by two percentage points to an incredible 9.75 percent. The decision was taken in an extraordinary meeting. The increase comes a week after another surprise, when the key interest rate was suddenly raised by 1.85 percentage points, also to protect the forint.

Now, the central bank is raising interest rates on deposits to 9.75 percent in an attempt to make betting against its own currency more expensive. The exchange rate reached historic highs, the euro exceeded 400 forints. The decision a week ago was supposed to stop the movement, but the euro quotes rose to 415 forints, and the central bank considered that a new emergency intervention was needed.

The situation in Hungary has become extremely delicate, with a large budget deficit, generated by the populist policies of Viktor Orban, meant to ensure his victory in this spring’s elections. At the same time, the government has come up with new taxes for large companies, which significantly degrades the economic environment. In addition, due to the conflicts with Brussels, Hungary does not have PNRR funding approved and risks blocking European funds due to non-compliance with the rule of law.

The Hungarian government is extending the freezing of food and gasoline prices until October 1, and the moratorium on loans and the blocking of interest rates until December 31, Hungarian Prime Minister Viktor Orbán announced on his social media page on Thursday.

“We are prolonging the price freeze! Gasoline remains at 480 forints (6 lei) “,

writes in the post, under a photo of the prime minister. The Budapest government recently capped prices for gas, electricity and gasoline, after prices began to skyrocket worldwide.

Due to the capping of the fuel price on the wholesale market, the MOL company loses 34.5 forints (0.45 lei) for each liter of fuel sold, the oil company sent to the Hungarian news agency MTI on Wednesday. According to MOL, the company respects the decision of the Hungarian Government regarding the price of fuels and informs its customers, as provided by the government decision.