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Change in approach improves Hungarian tax collection rate

Tax revenues in Hungary were 5% up year-on-year in 2017, by HUF 609 billion, the National Tax and Customs Administration (NAV) announced. The increase is due to a tendency of lower tax evasion, NAV chief András Tállai told state news wire MTI, noting that the increase outpaced the rate of GDP growth.

Total tax revenues amounted to HUF 13.402 trillion in 2017. The total rose even as the tax burden on families and businesses was cut by HUF 860 bln, noted Tállai.

The reason for the growth is that tax rates have decreased and it is no longer worth dodging taxes, the NAV head was cited as saying by news portal index.hu. Hungary has the lowest corporate tax rate and the second lowest personal income tax rate in the European Union, he added.

A change in approach at NAV, such as becoming more client-centered and providing assistance to taxpayers, also supported the improved tax morale, Tállai noted.

NAV has a new policy of cooperating with clients, as opposed to imposing fines or issuing debit collection orders. This means that taxpayers who fail to pay their taxes receive a notice. By complying with the notice, taxpayers avoid paying fines or additional costs.

Last year NAV collected HUF 50 bln following the issuance of such notices. This procedure is applied to customers with a debt of a maximum HUF 1 million to the tax authorities.