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Decree outlines tax allowances to companies making investments in Hungary

Tax allowances are available to companies that invest at least Ft 3 billion in their operations in Hungary. However, investments up to Ft 1 billion in underdeveloped regions are eligible for the allowances. Companies may also be eligible for tax allowances if they invest as little as Ft 100 million in environmental or research projects, or the production of film and video. Investments of as little as Ft 100 million are also eligible if they result in the creation of workplaces. Investments eligible for allowances must be operated by the company that availed of the allowance for at least five years, in the case of big companies, and three years in the case of SMEs. Applications for the tax allowances must be made before the start of the investment for which the company aims to receive the allowance, and the investment plans must first be examined by the Finance Ministry.

The decree also spells out which investments are not eligible for the tax allowances. Among them are investments in broadband internet services in areas where such services already exist and the construction of shops larger than 1,000 square meter. The size of the tax allowances depend on the size of the investment and the region in which it is made. A week earlier, undersecretary at the Finance Ministry Tamás Katona said tax allowances for investments in Hungary's more developed regions would fall from the start of next year, while allowances for investments in underdeveloped regions will remain unchanged. The limit for tax allowances on investments in the underdeveloped regions of northern Hungary, the Northern Great Plain, the Southern Great Plain and southern Transdanubia will remain unchanged at 50%, while the limit in central Transdanubia will fall from 50% to 40%, and the limit in western Transdanubia will fall from 50% to 30%. The new limits on allowances are not included in the decree. (Mti-Eco)