The taxes levied on businesses will decrease by two and a half per cent if Parliament votes for the bill submitted by Minister of National Economy Mihály Varga on Tuesday. The Minister of National Economy told the Hungarian news agency MTI: the six-year wage agreement signed last November has come up to expectations, and as a result, pursuant to his motion, the taxes payable by employers will be 2.5 per cent lower, rather than by 2 per cent, as of next January.

Mr Varga reiterated: the Government concluded the deal with the representatives of employers and workers in November 2016 which also contemplates tax cuts in order to bring the era of low wages to an end in Hungary. Pursuant to the agreement, as of 1 January 2018, the rate of the social contribution tax would be reduced to twenty per cent. As according to calculations, the average pre-tax wage increase in the competitive sector will reach 11 per cent in the first nine months of this year, a further half a per cent reduction may enter into force at the beginning of 2018, the Minister pointed out. He remarked that this half a percentage point on its own will leave over forty billion forints more with employers.

The Minister of National Economy also highlighted that, in addition to the social contribution tax, the rate of the health care contribution tax will also be reduced from 22 per cent to 19.5 per cent. As a result, private individuals, too, will be required to pay less tax on their so-called other incomes.

Mr Varga pointed out that Hungary is now at the forefront of the EU in the fight against the black economy and also as regards the rate of the personal income tax which is the second lowest in Europe. At the same time, in six years’ time, we shall be at the top of the rankings in the EU with a significant improvement in the tax wedge competition as by that point in time employer taxes may decrease to more than one half, by 15.5 percentage points, the Minister stressed.

(MTI)