Lukoil cuts back in Hungary over 'crisis' taxes: report

5th January 2011, Comments 0 comments

Lukoil, the second-biggest Russian oil company, is reducing its activities in Hungary because of taxes that have also put the government at odds with Brussels, a report said Wednesday.

"Lukoil's Hungarian branch on January 1 returned its license to conduct wholesale trade in fuel," Lukoil official Denis Ryupin was quoted as saying in an article on the Nepszabadsag daily's website.

Ryupin said that with "the exceptional taxes, the operations had become loss-making, without any hope of a change in the near future."

He said Lukoil would continue its retail operations. The company has 76 filling stations out of some 1,500 in Hungary.

Hungary on October 18 imposed additional taxes on the telecommunications, energy and retail sectors for a three-year period as a way of helping replenish state coffers and bring down the public deficit.

The taxes, which represent a levy on a company's annual revenues, are expected to raise 582 million euros (797 million dollars) each year.

The European Commission on Monday said it was investigating whether the Hungarian "crisis" tax, which have upset major European firms, was in compliance with rules set by the EU which is currently chaired by Budapest.

The Commission has been asked by 13 leading European firms to sanction Hungary over the tax which they consider discriminatory and anti-competitive.

© 2011 AFP

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