Hungarian government submits 2017 tax bill

State secretary András Tállai speaks in the Parliamentʼs plenary session on Monday. (Photo: MTI/Tamás Kovács)

The government is proposing tying the excise tax on vehicle fuel to global energy prices and spending the additional revenue on road renovation, Tállai said. 

Excise tax on fuel would rise by HUF 10 for diesel and HUF 5 for petrol if the global price of Brent crude drops under $40, in one variation, and $50 in another, Tállai said. The measure would generate an additional HUF 20 billion in budget revenue.

The excise tax on tobacco will rise by September 1 to comply with European Union rules, Tállai said. The increase must reach 29% by the end of 2017, he added.

Electronic cigarettes will also be taxed with a stamp similar to the one affixed to alcohol, he said.

The government wants to help families through changes to personal income tax and VAT, Tállai said.

The government recently announced plans to reduce from next year the VAT rates on milk, eggs and poultry from 27% to 5% and the rates for internet service and catering to 18%. The VAT rate on catering will be cut further to 5% from 2018.

Tállai said the reduction in the poultry VAT rate would result in HUF 19 bln less budget revenue, while the cut in the restaurant VAT rate would reduce revenue by HUF 8.5 bln. Some HUF 4.5 bln less revenue will come from VAT on milk, HUF 10.5 bln from VAT on eggs and HUF 12.5 bln from VAT on internet services, he added.

Changes to tax preferences for families with two children will save 350,000 households a combined HUF 15 bln.

The government will scrap the HUF 30 million limit on tax preferences for investments by SMEs.

To promote mobility, the government will raise the tax-free threshold for employersʼ compensation of employee travel costs from HUF 9 to HUF 15 per kilometer. Tax preferences will be offered for renovation of employee hostels, and employers may account double the cost of running such establishments in their expenses. Housing support for employees will become tax exempt for areas in a 60 km radius.

Companies that cannot avail of the full R&D tax preference against their corporate tax will be allowed to apply the deduction to social contributions up to a 50% threshold.

In the interest of cracking down further on the shadow economy, the government would like to reduce the threshold requiring a detailed report of VAT to the tax office from HUF 1 million to HUF 100,000.

The government would also like to tighten control on an electronic monitoring system for road haulage companies, broaden the system of online invoicing and require vending machines to be connected directly to the tax office.