Hungary has been a frontrunner in the fight against the black economy, therefore we will maintain the EKÁER (Electronic Public Road Trade Control System), an effective system for filtering out VAT fraudsters, Minister for National Economy Mihály Varga said, following the Ecofin’s session in Luxembourg earlier today.

The Minister has called attention to the proposed Hungarian version of a Google-tax again, which scheme could not only levy taxes on but also collect them from digital giants.

According to a European Commission study, the revenue shortfall at member states due to unpaid taxes was EUR 152bn in 2015, Mihály Varga pointed out. The VAT reform proposal tabled by the Commission at the current session, which aims to combat tax optimization practices designed to evade EU tax regulations, may significantly reduce this amount. However, in light of these facts, the Commission’s condemnation of Hungary’s Electronic Public Road Trade Control System as a scheme that violates EU law is paradoxical – especially as Brussels had formerly acknowledged the scheme’s efficiency in combating the grey economy.

Hungary fully endorses the Commission’s goals, such as making the VAT system simpler and more resilient against fraud, he stressed.  Experts at Hungary’s Ministry for National Economy are currently examining whether, and to what extent, the Commission’s proposal achieves these objectives. We are already certain that the EU scheme cannot replace those two Hungarian on-line solutions through which the tax gap has been narrowed by 7.2 percentage points in Hungary, the Minister stated. The EKÁER has been an adequate tool for combating the so-called carousel fraud, and on-line cash registers have been the right choice for filtering out systematic tax dodgers in the retail sector. On the other hand, the Commission’s VAT reform proposal could enable data inflow from other member states which may be a great help in the risk analysis of the tax authority.

Another key topic on the ministers’ agenda was the taxation of digital enterprises, Mihály Varga said. The Minister found it strange that several proposals initiated a tax system based on the revenues of large Internet services providers, whereas a similar Hungarian proposal had been found by the Commission to be incompatible with EU law.

Finance ministers also bid goodbye to their German colleague, Wolfgang Schauble. He is one of only a few German politicians who have been sympathetic to the problems of Hungary and other Central European countries, Mihály Varga emphasised. We will continue to count on him in his new position as an advocate of an integrated Europe, he added.

(Ministry for National Economy)