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Hungary: Government wants no circular debt

The government is dedicated to curb the rate of circular debt in the economy by regulating public procurement.

The tax package to be submitted tomorrow includes the tasks and obligations of those involved in public procurement and would make it impossible for businesses to be paid without paying off their debts.

According to the proposal a contractor could only pay its sub-contractor over Ft 200,000 ( about $1180)monthly if the sub-contractor can prove it has no public dues and is not under liquidation or bankruptcy proceedings.

Businesses can either apply to the tax agency for confirmation or register at a monthly updated public database. When the system was introduced in March with a Ft 100,000 limit it was harshly criticized. (Napi Gazdaság)