getting the right deal - what should you consider when looking at an investment in hungary and...

Getting the right deal - What should you consider when looking at an investment in Hungary and Budapest?

22 March 2013

Nick KósCountry Managing Partner PwC Hungary

www.pwc.com/hu

Budapest International Business Center ConferencePwC 2

Getting the right deal

1.Strong tax competition for investors – What can be a winning formula?

2.What’s on the agenda of CEOs now?

3.Budapest – Could it be the city of the future?

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Getting the right deal

1. Tax battle

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Strong Competition for the Investors – Tax Battle How to attract them?

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The regional picture

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Paying Taxes 2013Basic correlations

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Paying Taxes 2013Basic correlations

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Paying Taxes 2013Key findings at the global and local level

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277hours

In Hungary 12payments

50,3%Total Tax

Rate

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Paying Taxes 2013Corporate income tax is not everything!

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Paying Taxes 2013Key findings at the global and local level

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Paying Taxes 2013Key findings in the EU & EFTA

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Paying Taxes 2013Regional comparison

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Paying Taxes 2013Regional comparison

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22 March 2013

Paying Taxes 2013Regional comparison

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Individual perspectives Both refundable and non-refundable incentives are available to investors coming to or expanding in Hungary + „VIP” investment subsidy

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Source: HITA, 2012

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Recently published tax changes

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•Extension of the applicability of investment incentives

•Realization of a flat personal income tax rate for all income

•Simplification of conditions for the implementation of e-invoicing

•Repeal of crisis taxes levied on special sectors

Forward-looking elements of the envisaged tax policy

•Shift in the tax burdens from income to consumption taxes

•Tax incentives to enhance job creation

•Simplification of administrative requirements

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Getting the real deal

1. Tax battle2. CEO’s views

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PwC CEO Survey

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PwC CEO Survey

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How confident are CEOs about your company’s prospects for revenue growth over the next 12 months?

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Global (1330)

CEE (95)

Western Europe

(312)

Russia (41)

Romania (55)

Middle East (32)

Very confident 36 42 22 66 42 53

Somewhat confident 45 41 46 29 44 34

Not very confident 15 15 23 5 11 13

Not confident at all 4 2 9 0 4 0

18

Hungary

42

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Search for growing markets…

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… but growth has more dimensions

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Global fear of governmental actions, rising TAX burden

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Government’s role – according to the CEOs

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The government has been effective in helping create a skilled workforce

The government has been effective at ensuring financial sector stability and access to affordable capital

The government has maintained a level playing field despite having stakes in private enterprises

The government is listening to Industry representants before making regulative steps

The government has reduced the regulatory burden on corporations

The government helps companies secure access to natural resources (e.g. raw materials, water, energy)

The government supports innovation in the private sector

0% 20% 40% 60% 80% 100%

23

35

39

40

35

10

15

27

25

24

22

27

22

16

28

16

8

9

15

31

19

9

9

8

3

9

16

26

1

1

2

4

2

4

4

12

14

19

18

12

18

21

Strongly disagree

Disagree

Neither agree nor disagree

Agree

Strongly agree

Don't know/ Refused

Reducing poverty and inequality

Ensuring financial sector stability

Creating and fostering a skilled workforce

0% 20% 40% 60% 80% 100%

29%

59%

60%

… And in compariosn: what role and how does it take on now?

Percentage of CEOs

In Hungarian CEOs opinion what should be the government’s priority?

!!

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Getting the right deal

1. Tax battle2. CEO’s views3. What makes us a city/country of

future?

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3 Hungarian „success indurties” we used to be proud of…

-SSC

-Automotive

-Electronics

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… and what are the success factors here?

PwC

Service sector

1991

1996

1998

1999

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

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Automotive

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Electronics Industry

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Budapest

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Budapest – Could it be the city of the future?

Capitals - the key issues:

• Intellectual and social capital

• Democratic capital

• Culture and leisure capital

• Environmental capital

• Technical capital

• Financial capital

Source: ‘Cities of the future: Global competition, local leadership’, PwC

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Economic factors are only part of the game!

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International success stories from the CityPrezi.comUstream HungaryLogMeIn

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Assembly lines in Electronics vs. …

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… High value added, creative industries

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… High value added, creative industries

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The city of tomorrow

122 March 2013