en.Wedoany.com Reported - Hungary's parliament has voted to abolish the country's carbon dioxide (CO2) quota tax, overturning a levy that had been criticized by companies participating in the European Union Emissions Trading System (EU ETS).

The repeal is part of a broader package of tax and constitutional amendments approved by lawmakers. The government stated that these changes are intended to fulfill commitments related to the disbursement of EU funds while simplifying the domestic tax framework.

The CO2 quota tax, introduced in 2023, imposed an additional levy on income derived from the sale of EU emission allowances. Industry participants argued that the measure added a financial burden on top of costs already incurred under the EU ETS. Under EU ETS rules, companies must purchase allowances to cover their greenhouse gas (GHG) emissions.

Under the newly adopted law, the tax will be eliminated, and companies that previously paid it are eligible for refunds. This marks a significant policy reversal for carbon market participants in Hungary.

The government stated that the broader legislative package aims to enhance the competitiveness of Hungary's economy while aligning domestic legislation with European requirements. In addition to tax reforms, lawmakers also approved measures affecting corporate taxes and other regulatory provisions.

Abolishing the tax will remove one of the few national levies directly targeting EU emission allowance trading. For companies covered by the EU ETS, this change is expected to reduce compliance costs and increase predictability in carbon market operations.

This follows sustained criticism from businesses that the tax hindered efficient participation in the emissions market and undermined the role of the EU ETS as the EU's primary carbon pricing mechanism.

The repeal marks a shift in Hungary's approach to carbon market regulation, making the EU ETS the primary pricing tool for industrial emissions while ending a national surcharge on carbon allowance sales.