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Companies to pay an average 11% of profits as tax in 2010

Hungarian companies will pay on average 10.9% of their pre-tax profit as corporate tax because of reductions in tax preferences, up from 7.4% in 2009, business daily Napi Gazdaság said on Wednesday, citing targets in the 2010 budget bill.

Although the corporate tax rate will fall from 20% to 19% (the 4% “solidarity tax” will be scrapped, but the corporate tax rate will rise from 16% to 19%), tax preferences will be cut, causing the corporate tax burden to grow. The amount companies may deduct from their tax base for investments over HUF 3 billion will fall to HUF 8.5 billion in 2010 from HUF 21.2 billion. The deductions for developments decided on a case-by-case basis will drop to HUF 12 billion from HUF 26 billion. Companies who opted for the simplified business tax are expected to pay HUF 183.9 billion to the state in 2010, up from a projected HUF 161 billion in 2009 as the rate for the tax will rise from 25% to 30%.

The government expects companies to pay HUF 544.5 billion in corporate tax in 2010, up from a projected HUF 499 billion in 2009. Combined pre-tax profit of companies is seen falling to HUF 4,988 billion in 2010 from HUF 6,780 billion projected for 2009. (MTI-Econews)