Companies to pay new 'solidarity tax'

The new 4% "solidarity tax", part of the government's "New Balance" austerity package, will come into force for companies and private entrepreneurs on September 1, 2006; private individuals earning more than an annual Ft 6.05 million per year will be subject to the tax from January 1, 2007, the bill published on the website of Parliament show. The government expects the new tax to generate Ft 40 billion in budget revenue from companies in 2006 and Ft 170 billion in 2007. Payments of the solidarity tax by private individuals are expected to generate Ft 24 billion of budget revenue in 2007. The tax base for companies will be pre-tax profit, adjusted upwards with support and unrequited transfers paid out by the business recorded among expenses and reduced by support and dividend received. Tax paid abroad could also be deducted in line with respective international agreements, if it has not been deducted from other income or property taxes due.