To tax or not to tax?
Tuesday, July 25, 2006, 11:54
Plans to allow Hungarian private individuals and companies a tax amnesty if they transfer money from their foreign bank accounts to Hungary have not been implemented and might be completely scrapped, the daily Népszabadság reported on Monday. The plan to apply a 10% flat rate tax on these transactions and ensure anonymity to those who decide to bring their money home has been included in the government's "New Balance" fiscal program, but after concerns raised by tax advisors, it is currently under review by the Justice Ministry. According to the advisors, the plan's original version does not include guarantees to prevent the use of the scheme for money laundering, plus companies could exploit the amnesty opportunity as a loophole for tax evasion. Some other questions may rise if legalization those money be worth for the owners, knowing the current fiscal politics of the homeland. Compared to the risks involved for Hungary's international reputation and the budget's condition, the expected revenue from the scheme is miniscule, some experts said. Estimates show that Hungarian private individuals and companies hold nearly Ft 1,000 billion or about € 3.6 billion in bank accounts abroad, not to mention the investments in properties and other valuable things. Hungary plans to follow other European Union member countries' example by allowing a one-off tax amnesty on the transfer of this money back to Hungary. (MTI)