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Fidesz MPs, cabinet agree to raise Simplified Business Tax rate to 37%

The cabinet and the parliamentary group of governing Fidesz support raising the rate for the Simplified Business Tax from 30% to 37% of revenue, the press chief for the group of MPs told MTI on Thursday.

Fidesz MPs asked the cabinet not to raise the rate to 40%, but to 37%, and the cabinet supported the increase, said Ákos Krakkó. Fidesz parliamentary group leader Janos Lazar and chairman of Parliament’s Economy Committee Antal Rogán are submitting a bill on the increase, he added.

The government and MPs have been hammering out a compromise on the tax for a couple of weeks. Prime Minister Viktor Orbán originally wanted to eliminate the tax from 2012, but Fidesz MPs asked to keep the tax another year and raise its rate to 35pc. At a meeting of the cabinet and the Fidesz parliamentary group on Monday, Orbán said the MPs had "convinced" him, and Rogán said the rate of the tax would be raised to 35pc or 40pc.

MPs earlier decided to raise the annual revenue cap for companies eligible for the tax, which replaces all other company taxes, from HUF 25m to HUF 30m.

Companies that opt to pay the Simplified Business Tax, also known by its Hungarian acronym "eva", instead of the conventional corporate profit tax, may not make any deductions from their tax base.

The tax generated revenue of HUF 86.5bn in January-September, the latest general government data from the National Economy Ministry show. It is expected to bring in HUF 180.1bn for the full year, according to a downward revised target approved by Parliament, practically level with the HUF 181.9bn eva generated in 2010.

The tax is expected to bring in revenue of HUF 179.1bn in 2012, HUF 187.7bn in 2013, HUF 197.8bn in 2014 and HUF 208.2bn in 2015, according to the 2012 budget bill.