New KATA law likely forcing 85% dropout rate

Analysis

According to initial expectations, as a result of the amendments to the law on the itemized tax (KATA), effective from September, the number of KATA taxpayers may decrease from around 450,000 to 70,000-80,000, a reduction of approximately 85% according to Világgazdaság, citing policy sources.

This calculation matches the estimate of László Németh, president of the National Association of Industry Associations, who had previously suggested an 80% dropout rate.

Flat-rate taxation, unlike KATA, is considered a full year of service, forms a pension fund at least twice as large, and the family tax discount can also be claimed from it. The type of tax that those who leave the KATA will switch to may vary from person to person, but flat-rate taxation seems to be one of the best alternatives at the moment.

State Secretary András Tállai of the Ministry of Finance said in the parliament before the law was voted on that the ministry and the government would offer other favorable taxation methods to those who cannot continue with KATA. According to him, the new system will be fair.

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