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Analysts welcome tax changes but question bank tax

Analysts polled by business daily Világgazdaság welcomed government plans to raise the profit ceiling for the preferential corporate tax rate but expressed misgivings about a tax on financial sector companies, the paper reported on Wednesday.

Plans to raise the profit ceiling for the 10% corporate tax rate from an annual HUF 50 million to HUF 500 million and to introduce an extraordinary tax on banks, leasing companies and insurers that will generate some HUF 200 billion in budget revenue a year were among almost 30 government measures outlined by Prime Minister Viktor Orbán in Parliament on Tuesday. The prime minister also announced plans to introduce a flat-rate personal income tax and cut total spending on public sector wages by 15%.

Csaba László, a partner with consultancy KPMG, told the paper that the private sector would “basically positively assess” the measures, but he said the higher ceiling for the preferential corporate tax rate might give some companies an incentive to split up their operations in order to qualify. He said the introduction of a 16% flat-rate personal income tax was “useful for the country from a public relations point of view”, but said he “had doubts” about whether the government could collect HUF 200 billion in tax from banks.

MKB Bank chief analyst Zsolt Kondrát said most of the planned tax changes were “positive”, adding that plans to view public sector wage costs as a whole, rather than relative to each employee could result in significant savings. But he called the HUF 200 billion the government expects to get from banks “overdone”. (MTI-Econews)