Tax experts tell us what to expect

Banking

FROM TODAY’S PRINT EDITION: We asked Hungary’s top-earning tax consultants and accounting firms about the new tax laws, and how they can help you deal with them. These are the answers we received.




BDO Hungary

Zsófia Siegler, Partner

What are some of the more important changes in the tax situation for businesses in 2015?

 While the tax system has been transformed in previous years, no general changes can be observed in the majority of taxes. There is only one flat rate for personal income tax, whereas the two rates for corporate income tax are stable. In recent years, taxation has basically shifted towards value added taxes. At the same time, sectoral and extra taxes represent a burden for companies, and the huge number of different kind of taxes also makes business more complicated.

Given all the changes in the tax code, do you expect your corporate clients to pay more or less in total taxes (including VAT) during 2015?

The amount of state entries received from taxes in proportion to the previous year’s revenue depends primarily on economic trends, and not on the modifications entered into force on January 1. Factors such as a low inflation rate, inbound and outbound demand, and variations in exchange rates all have an effect on how tax revenues change. However, I could single out one new option provided by the 2015 tax changes. A new type of tax credit is accessible in connection with corporate tax: The taxpayer is entitled to a tax credit if they dedicate part of their payable tax to sport or cultural purposes (a maximum of 7.5% tax credit can be realized).

How can a service like yours help clients deal with the changes in the tax structure?

It is of utmost importance for us to work together and on behalf of our clients in tax issues. We navigate and advise our clients through every tax question and/or represent them in front of the tax authority. Thanks to our international BDO network, we are able to provide our services to a local company or an entire company group.

Why should customers choose your service over others?

As the leader in mid-market audit and tax advisory firms, we are able to provide the same services and quality as the top firms in the industry, while offering more flexible pricing, due to our structure and versatility. Our 25 years of experience in the Hungarian market, coupled with our distinguished consultant team and superior client engagement, all guarantee the highest level of service excellence. 

 

BPO Audit Tax

László Killik, Partner

What are some of the more important changes in the tax situation for businesses in 2015?

Based on the recent changes, 2015 is going to be the year of financial administration. Companies must prepare for increased administrative tasks. This is especially true for companies with commercial activities.

Given all the changes in the tax code, do you expect your corporate clients to pay more or less in total taxes (including VAT) during 2015?

In fact, it depends on the industry whether the company has to pay more or less. I’m pretty sure that the new tax administration tasks and their analysis will entail costs for most companies. If a company would like to determine whether a tax or administrative cost applies to them or not, they must invest in their employees’ time – and maybe in some advisory services.

How can a service like yours help clients deal with the changes in the tax structure?

The new increase in administration demands means companies need flexible and quick answers. No successful company can go forward without a reliable and carefully prepared advisory background. Our clients can benefit from our business experience, which allows us to answer most of their questions within a very short period of time, something that is essential for prudent and safe operation.

Why should customers choose your service over others?

There are many high-quality service provider and advisory firms in Hungary. Every firm has a different corporate and service culture. If I had to highlight one of our strengths, I would say we are top level in costumer care. We know that excellence in quality is essential for our clients. The comfort provided by our services keeps our clients satisfied. If you place your trust in us, you will feel the difference.

 

Colling Accounting & Consulting

Andrea Butkovics, CEO

What are some of the more important changes in the tax situation for businesses in 2015?

One of the most important changes within the system of corporate taxation is the extension of the affiliation relationship, according to which the concept of affiliated enterprises also includes situations when decisive influence is realized regarding the business and financial policy of the economic enterprises through same-person management of the associated parties.

A noteworthy change in the domestic summary report, is that the itemized VAT data-submission limit is reduced to HUF 1 million (from HUF 2 mln). From now on taxpayers can also submit data of transactions that have VAT amounts that are lower than this limit – which means taxpayers can practically send their entire VAT analytics to the tax office.

The most important change in the law on the rules of taxation is the introduction of the so-called EKAER-system, and its supervision by the tax department. The point of the system is that any transport of goods via public roads made with a vehicle that is subject to toll requires possession of a NAV-issued control number. Those involved in transporting goods have to provide data to NAV both before the start of deliveries (loading) and also at the completion of deliveries (unloading).

Given all the changes in the tax code, do you expect your corporate clients to pay more or less in total taxes (including VAT) during 2015?

The amount of tax payable can depend on many criteria. A higher tax liability can be an indication of the growth of the business, which is a positive thing – most of our clients fall into this category. Given the existing tax laws, the most important thing is to comply with the current regulations, since the more strict tax authority controls and increasing penalty limits can cause extra obligations. The introduction of the EKÁER system also means extra administrative costs for companies dealing with transportation – the additional workload requires one extra full-time employee.

How can a service like yours help clients deal with the changes in the tax structure?

The 2015 tax changes increased the necessity for a more professional finance and accounting support staff. By monitoring our client’s processes, we can show them where and how they can operate more tax-effectively, and where there are dark zones on their tax-map. Some of our partners wish to see incomes and costs separated by activities. We also make it possible to view accounts via remote desktop access, so that clients can freely and directly check reports, in foreign languages too.

Why should customers choose your service over others

Our clients are professionally serviced in a friendly, supportive environment. The speedy, updated, authentic information, processed in line with high standards but also in an “understandable language” gives our partners an advantage over the competition.

Because at Colling, everyone counts.


Process Solutions

András Szalai, Managing Director, Partner

What are some of the more important changes in the tax situation for businesses in 2015?

We are of the view that overall there have been no fundamental changes for this year apart from measures introduced to target specific sectors, but the average business will only have to face the usual minor (though mostly unfavorable) changes.

To name one single measure that made a real impact we would pick one that is not closely connected to taxation: the introduction of the EKAER system (vehicle tracking for trucks) stole the show for 2015. Of course, much of the commotion has been due to the short notice on which the system has been implemented, but this is also something the industry seems to be getting used to. Clearly this change has been the one where our clients have required our assistance the most in interpreting the regulations.

Given all the changes in the tax code, do you expect your corporate clients to pay more or less in total taxes (including VAT) during 2015?

Clients coming from specific sectors will likely pay more taxes from this year. Actually in the absence of significant tax increasing measures, it is not necessarily the clients, but rather we, the service provider, who will feel the crunch in the first place. With the system becoming more fuzzy, and the overall administrative burden reaching new heights every year, we have to devote more and more of our resources to be able to deliver the same level of service quality and ensure compliance for our clients.

How can a service like yours help clients deal with the changes in the tax structure?

We warn our clients up-front about what is coming and help them address challenges in due course, so that they will not be caught off guard, like their competitors, when they have to adopt changes.

Why should customers choose your service over others?

We are flexible and can adapt our service offerings, within accounting, tax and payroll, to any new requirements (e.g. assistance with EKAER) from our clients that are triggered by the increased administrative burden and the rapidly changing legislation.

 



TMF Group

Ákos Nagy, Business Development

What are some of the more important changes in the tax situation for businesses in 2015?

The change with the most immediate impact on our clients’ tax compliance would be the introduction of the new Electronic Road Transportation Control System (EKAER), which will be run on a trial period until March 1. Other important changes include updates on the taxation of flexible benefits (such as food vouchers), the change in the definition of place-of-supply of services provided remotely, an updated definition for associated companies, extended VAT reporting requirements and the limits on the utilization of losses carried forward. These are the changes that affect most Hungarian businesses, while retail, tobacco and other sectors also face special taxes.

Given all the changes in the tax code, do you expect your corporate clients to pay more or less in total taxes (including VAT) during 2015?

As for the general changes, we do not expect that the amount of taxes paid by our clients will significantly change. However, this excludes sectoral taxes, such as those impacting tobacco or retail. The changes will lead to more complex reporting and administrative burdens, so many companies might start to outsource tax reporting to corporate service providers.

How can a service like yours help clients deal with the changes in the tax structure?

Outsourcing tax compliance helps companies to simplify their operations. Service providers, such as TMF Group, ensure that the businesses are compliant with the rapidly changing Hungarian tax law. We have local experts and work with the leading tax advisors in more than 80 countries worldwide to implement changes in the tax structures.

Why should customers choose your service over others?

TMF Group is a leading global provider of high-value business services to clients operating and investing globally. We are operating in more than 80 countries and focus on providing specialized and business-critical financial and administrative services that enable our clients to operate their corporate structures, finance vehicles and investment funds in different geographical locations. TMF Group has more than 20 years of experience in Hungary and a team of more than 60 specialists in HR and payroll, accounting and tax, and corporate secretarial areas, to keep you compliant with Hungarian regulations. 

 

UCMS Group Hungary

Balázs Z. Nagy, Sales Director

What are some of the most important changes in the tax situation of businesses in 2015? 

The 2015 tax amendments are mainly focused on changing the details of the currently existing provisions. Among other changes, there are newly introduced regulations on the corporate income tax law in connection with the innovation tax allowance, and new regulations related to the support of sport and higher education. There are also important changes in the deferral of tax loss and the definition of affiliated entities.  As for the value added tax, the reverse charge mechanism has been extended to temporary employment services from January. Furthermore, the main changes in personal income tax concern tax allowances and the system of non-wage benefits. The scope of the non-wage benefits remained the same in 2015, however their preferential tax limit was decreased from HUF 500,000 to HUF 200,000 with the exception of benefits provided by the Széchenyi Holiday Card, which has an annual limit of HUF 450,000. The support of families is still pretty important, therefore in addition to the current allowances a new tax allowance – called the first marriage tax allowance – has been introduced.  These changes have come into effect with a lack of practical interpretation advice, which will pose a challenge for service providers in 2015.  

Given all the changes in the tax laws, do you expect your corporate clients to pay more or less taxes (including VAT) during 2015?

We expect clients’ administrative tasks to increase, while their tax burden remains the same. For instance a new tool against VAT fraud has been introduced by the government, the EKAER system. From its implementation, only EKAER registered road transportation companies will be able to continue their activity. Another solution, the introduction of domestic itemized reporting of invoices with a VAT value over HUF 2 mln in 2013 was also an attempt to reduce VAT fraud. This value limit has been decreased to HUF 1 mln as of 2015, which also means a further administration burden for businesses.

How can a service like yours help clients handle the changes in the tax structure?
Predictability is the key of successful business planning. However, since tax law is a continuously changing field in Central and Eastern Europe, it is a huge challenge to remain up-to-date.  Here is some interesting data to illustrate this fact: In 2014, some 777 new acts (laws, regulations) were introduced. That means about 18,214 pages, which is 12 times the size of Leo Tolstoy’s War and Peace (1,488 pages in the Hungarian language).
This is a remarkable amount to read and understand, and requires practical experience to implement. Service providers have to be a step ahead, and as a part of the client’s team, have to attend proactively with advice in order to sustain a solid base for decisions that allow clients to reach their financial goals.

Why should customers choose your service instead of others?

Potential customers require comprehensive solutions. They are seeking an administration system that is able to serve them, not only in daily transaction processing and compliance, but also by providing continuous advisory services and a reliable basis for their decisions. They need a system that is available for them anytime and anywhere. Although the process is technology- based, we believe that the key to success is to find the best people and train them on the widest scale – professionally and in soft skills as well – in order to provide specialized account management to clients.

We strive to provide not just a high quality service, but also a client-centric and innovative administration ecosystem, with our accounting, payroll, HR administration and advisory services.

 

VGD Ferencz & Partner

Andrea Kuntner, Tax partner

What are some of the more important changes to the tax situation for businesses in 2015?

There were no significant changes in the existing tax system this year but we have some important changes in the regulations with possible significant effects on the taxpayer’s business results. Some of them are:

Corporate income tax: An important change regarding the use of carried-forward losses is that taxpayers will be able to use annual losses generated in 2015 and thereafter no later than the fifth tax year following the year when the loss was generated. As a temporary rule, losses generated in 2014 or before can be carried forward until 2025 at the latest.

The definition of related parties now also includes entities where executive management is the same and therefore has dominant control over the business and financial policies of the entities, even if no majority influence is observable in the ownership structure.

VAT: The scope of transactions under the domestic reverse-charge mechanism will be increased as of January 1. According to the new rules, the reverse-charge mechanism will now apply to all forms of labor-hire services, not only to labor-hire services for the supply of properties and to construction/engineering businesses that are already subject to the reverse-charge mechanism. The domestic reverse-charge mechanism will also be introduced for the supply of certain iron and steel products as specified in the VAT act.

Administration: A new reporting system called EKAER (Electronic Control System of Road Transport) was implemented regarding road transportation from January 1.

According to the relevant regulations, the obligation for registration in the EKAER system will be performed by taxpayers carrying out transactions where the goods are transported by road and the transportation is subject to road-toll payment.

Given all the changes in the tax code, do you expect your corporate clients to pay more or less in total taxes (including VAT) during 2015?

We expect that the general, profitable taxpayer has to pay less taxes on the corporate tax level because of the new deduction opportunities, but specific taxpayers (e.g. food chains, financial institutions) will have increased tax liabilities.

The general VAT rate remains the same (27%), but some sectors can make use of decreasing VAT rates and the extension of the reverse-charge mechanism.

However, our clients have to face increasing administration obligations in their daily business life (extended VAT declarations, more detailed transfer pricing rules, the new reporting system concerning road transport, etc.) together with multiplied tax controls and penalties.

How can a service like yours help clients deal with the changes in the tax structure?

In order to run a company, it is necessary to monitor closely the rapidly changing laws on accounting, fiscal matters and corporate law. VGD helps clients by giving to-the-point tax, audit and accountancy advice.

Our clients will have access to a single point of contact who can quickly mobilize dedicated teams and share resources on your behalf. Our professional team of auditors, accountants, tax consultants, lawyers and other experts offer clients custom-made, full-scale solutions.

Why should customers choose your service over others?

Both local and international corporate clients increasingly seek to obtain across-the-board professional services from a single service provider. VGD Group is a professional service provider with 600 professionals working through 24 practices in 11 countries across Europe. The group’s Hungarian practice delivers a wide range of financial services to its clients, from accounting and auditing through transaction and tax advisory services to transfer pricing solutions. The VGD Group is a member of the highly acclaimed international Nexia network, ranking in the top-ten of the world list of international networks of accountants and tax consultants.

The partnership with VGD enables us to provide international expertise on a local level and to optimize the financial dimensions of our clients’ businesses.


WTS Klient

Zoltán Lambert, Partner

What are some of the more important changes to the tax situation for businesses in 2015?

Changes to tax laws are listed in a 200-page-long document, and it is really hard to choose a few of them. We now have new strict rules that will make life riskier for those who are involved in tax evasion. However, taxpayers who always complied with tax laws will look at these new rules as stumbling blocks, and administration and penalty exposure will definitely increase. For example, transportation without the new Electronic Public Road Transportation Control System number means that products will be considered to be of unverified origin, enabling the National Tax and Customs Administration (NAV) to impose default penalties of up to 40% of the value of the goods in question. Penalties may be imposed after January 31. Transfer pricing documentation rules were also tightened.

Given all the changes in the tax code, do you expect your corporate clients to pay more or less in total taxes (including VAT) during 2015?

There were no fundamental changes in the tax rates. VAT remained the highest in the European Union and the general corporate income tax or personal income tax rates remained unchanged, with some beneficial changes in the personal income taxes concerning families. The introduction of certain new taxes (e.g. advertisment tax), or the increase in the food-chain supervisory fee will cause headaches for some companies, since these taxes are based on the net sales revenue and will erase their profits.

How can a service like yours help clients deal with the changes in the tax structure?

As mentioned above, tax administration increases, and taxpayers have to deal with new challenges and more rigourous tax inspections. We are ready to help the taxpayers in this rapidly changing environment, and to undertake the increased tax tasks on behalf of them. More importantly, we can provide them with practical advisory services, to achieve a better tax structure, and represent them in front of the tax authority.

Why should customers choose your service over others?

Instead of pre-fabricated solutions and lengthy expert opinions limiting responsibility, we provide our clients with clear and concise advice that can be implemented in practice. We possess major experience in expat services, VAT issues and preparing transfer pricing documentation with the help of the Amadeus system. Additionally, assisted by the WTS alliance that has its headquarter in Munich, we can help our clients establish contacts with almost every main economic and financial center in the world.

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