Hungary Announces Tax Cut Plan

04/06/2019

On May 31, 2019, the Hungarian Ministry of Finance announced numerous tax cuts as part of an economic growth plan.

The Economy Protection Action Plan, which was recently adopted by the Government, includes the following measures:

• A reduction in the social contributions tax from 19.5 to 17.5 percent effective July 1, 2019;
• A one percent cut in the small enterprise tax (KIVA) from 13 to 12 percent effective January 1, 2020;
• The abolition of the simplified entrepreneur tax (EVA) and the merging of pension contributions, healthcare contributions, and unemployment contributions into a single levy;
• The abolition of advanced corporate tax payments, which applies to firms with annual turnover in excess of HUF100m (USD343,310). This means that the affected businesses must settle their tax payments with their tax returns by May 20 each year, instead of on December 20 in the previous year.
• The deferral of the advertising tax from January 1, 2020, to December 31, 2022;
• A reduction in VAT on accommodation services from 15 to eight percent and the extension of the four percent tourism tax to these services;
• VAT refunds of up to HUF5m for taxpayers constructing new homes or renovating existing properties in small settlements from January 1, 2020; and
• The gradual reduction in the project value threshold for the development tax discount from the existing level of HUF500m to HUF50m for small business and to HUF100m for medium-sized firms by 2023.

Source: Pride Partners International