Proposal on new tax measures in Hungary
The new proposals submitted by the Ministry of Finance to alleviate the epidemiological situation can affect almost all economic operators. According to the draft, the current economic situation would be remedied by the government with additional tax measures.
Possible specific tax legislation changes
As we wrote in our previous newsletter, from July 1, the social contribution tax (SZOCHO) will be reduced by two percentage points according to the draft, while the simplified public contribution tax (EKHO) will also be reduced by two percentage points compared to the previous level. While SZOCHO affects about 4 million employees and roughly 300,000 companies, with the reduction of EKHO, for example, the state is trying to optimize the economic situation of 40,000 individuals and private sector workers in special fields, with to be paid by employees only 15.5 percent instead of 17.5 percent from July 1.
In addition, KATA taxpayers can also expect a positive change, which means that, e.g. the benefit base of a small business taxpayer, whose monthly burden has been HUF 50,000 so far, their benefit base will increase from HUF 98,100 to HUF 102,000 with the adoption of the new proposal. The supply base of the KATA taxpayer, whose previous burdens amounted to HUF 75,000, will increase from the current HUF 164,000 to HUF 170,000.
Full corporate tax exemption for investments
Based on the submitted proposal, full corporate tax exemption may be granted for reinvested profits, and other investment incentive measures will leave HUF 10 billion at companies.
This means that in the next four years the profits of Hungarian companies could enjoy full corporate tax exemption in case of investing them in Hungary.
As per the plans of the government the favourable regulation could be available to all domestic companies, and according to the bill, the large enterprises and multinational companies who based in abroad, but operating in Hungary also. They can take advantage of the opportunity if they do not export their profits abroad, but invest it in Hungary.
Based on the proposal now only the decision should be made to take advantage of the discount, and the companies would have four years to complete the new investment.
Additional resources for companies
Within the framework of the GINOP (Economic Development and Innovation Operational Programme) implemented by the Ministry of Finance, as per the plans of the government HUF 310 billion of non-repayable funds and HUF 110 billion of 0% loans would be used as part of the economic protection action plan, on the basis of which new calls for tenders are also planned to be announced.
Thus, the GINOP could provide cover for economic protection programs such as wage subsidies to help enterprises (within the framework of the HUF 200 billion program, the state reimburses 70% of wages for lost working hours (maximum 85%) to enterprises).
Similar to the above listed possibility, special wage subsidies for researchers, developers and engineers are planned to be implemented at the expense of GINOP resources.
According to the latest ITM (Ministry for Innovation and Technology) report, by April 30, nearly 400 companies had submitted applications recently, amounting to HUF 471.935 million.
