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PM presents plan lowering payroll, corporate tax to Parliament

Hungary’s government presented a tax package to Parliament that would effectively lower taxes paid on corporate profit and reduce the payroll tax, while raising the main VAT rate.

Under the government's plan, the corporate profit tax would be raised from 16% to 19%, but the 4% “solidarity tax” would be scrapped at the same time, effectively lowering the tax companies pay on profit from 20% to 19%.

The payroll tax would be lowered by five percentage points to 27%. The fixed monthly healthcare contribution would remain unchanged at HUF 1,950 per month.

The tax base would be broadened and many tax breaks eliminated.

The main VAT rate would be raised from 20% to 23%. The excise tax on cigarettes, alcohol and vehicle fuel would be raised 3%-7%.

The tax rate for the lower bracket of the personal income tax would be raised from 18% to 19% and the threshold for the lower bracket bumped up from HUF 1.7 million to HUF 3 million. The rate for the upper personal income tax bracket would be raised from 36% to 38%, but the “solidarity tax” for private individuals would be scrapped. (MTI – Econews)