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Varga submits bill to reduce ‘tax bureaucracy’

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Aiming to reduce "tax bureaucracy" in Hungary, a bill was submitted to Parliament last Friday by Minister for National Economy Mihály Varga, containing a number of changes to related legislation, according to Hungarian news agency MTI.

The stated justification for the submitted bill is to reduce administration and simplify taxation, as well as to respond to the need for new tax policy measures in order to “incentivize certain priority goals,” the news agency reported. “The most important element of the bill, in addition to reducing the public burden and boosting competitiveness, is scaling back tax bureaucracy,” Varga’s ministry said in a statement, according to MTI. 

In the case of the so-called “KATA” construction, the revenue threshold for the itemized tax for small businesses would be raised from HUF 6 million to HUF 12 mln from next year. For businesses using the so-called “KIVA” construction, the threshold on total assets for companies already taxed under the small business tax would be raised to HUF 1 billion, while the threshold for companies opting for “KIVA” for the first time would remain at HUF 500 mln, MTI reported. For those opting for the “EHO” scheme, the number of rates for the healthcare contribution would be reduced to two (14% and 27%) from five (6%, 14%, 15%, 20% and 27%), MTI added.

Under the bill, tax preferences would be introduced for investors in startups up to HUF 20 mln, annually over four years, a change which could bring start-ups HUF 40-60 bln in investments, the ministry said.

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