Hungarian poultry sales to rise due to VAT cut

By Jaroslaw Adamowski

- Last updated on GMT

Hungary's plan to cut its chicken tax could stimulate consumption of poultry
Hungary's plan to cut its chicken tax could stimulate consumption of poultry

Related tags Poultry meat Meat Poultry

Hungary’s poultry sales could increase by up to 5% next year due to the government’s decision to cut the value-added tax (VAT) on chicken, according to senior industry representatives.

Attila Csorbai, president of the country’s industry association, the Poultry Products Council (BTT), told local daily Magyar Hírlap that the move to slash VAT from 27% to 5% was expected to not only strengthen domestic consumption, but also increase the demand for high-quality poultry meat.

The VAT cuts were passed by the Hungarian parliament in June 2016, allowing the decrease in tax rates on poultry meat, eggs and milk. The new rates will begin to be applied by the finance ministry on 1 January 2017.
Hungarian poultry meat industry​ players have long called on the country’s government to reduce the VAT on poultry meat, since the cabinet decided to cut the tax rate on pork. Csorbai had reportedly been in talks with Hungary’s State Secretary for Agriculture György Czerván on the proposed measure.

Bid to boost meat consumption
Budapest moved to lower the VAT on pork meat to 5% on 1 January 2016, in a bid to stimulate local consumption. This was preceded by the launch of a number of additional incentives for pig breeders and pork meat processors. This included the government’s flagship initiative to provide some HUF1.6 billion (€5.15m) in state aid to local pig breeders, with the aim of doubling the number of hogs in Hungary from about three million in 2014 to some six million head by 2020.
Poultry meat currently dominates Hungary’s meat sales, as an average Hungarian consumes some 32kg per capita annually. In comparison, the country’s average annual consumption of pork meat is about 28kg per capita, according to figures released by the BTT.

Set up in 1991 and headquartered in the country’s capital Budapest, the BTT represents the interests of a number of major Hungarian poultry meat processors and farm owners. These include Baromfi-Coop, Avium 2000, Gallicoop Pulykafeldolgozó and Kiskunhalasi Baromfifeldolgozó, according to data released by the industry association.

Regional trends

On a related note, the Hungarian government’s decision to decrease the VAT on meat is part of a region-wide trend towards lowering the tax burden on the meat industry. In neighbouring Romania, the country’s cabinet moved in June 2015 to cut the VAT on meat and processed meat products from 24% to 9%.

The government’s decision, according to local industry players, has significantly contributed to stimulating the domestic demand for meat, including poultry, as well as combating tax evasion, which has been plaguing the Romanian meat industry. Livia Harbuz, deputy head of the Romanian parliament’s Agriculture Commission, has told local media that this issue had an impact on as much as 40% of Romania’s meat sales.

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