Hungary has taken on an active role internationally in combating tax fraud; Minister for National Economy Mihály Varga said at the conference organized by PricewaterhouseCoopers (PwC) with the title “VAT Fraud in the CEE region”.
At the event, where Czech Finance Minister Andrej Babiš was also present, the Minister stressed that in the opinion of the Hungarian Government one of the most effective tools against tax fraud is the introduction of reverse-charge VAT.
By today, fraud schemes which exploit discrepancies between the regulations of individual countries have become business-like and well-organized, he pointed out. The Hungarian Government has been seeking a way at the European Union to increase the number of goods and sectors for which the reverse-charge VAT method could be applied.
In Hungary, this method has been working effectively in the most adversely affected fields, scrap metal trade and the construction sector, Mihály Varga said. However, the European Commission has not permitted the introduction of the scheme in other sectors, such as pork and sugar trade.
Since 2010, the Government had introduced several regulations and measures within the national legislation that have proven successful in combating the black economy. Of these, he highlighted two: the introduction of on-line cash registers and the Electronic Road Transportation Control System, the so-called EKÁER. While the new cash registers are expected to prevent black sales, the EKÁER is designed to prevent the purchasing and selling of goods of uncertified origin, which are accordingly untaxed and the reclaiming of VAT as a result of bogus trade activity, he stated.
Mihály Varga also noted that in 2014, within the HUF 300bn of extra VAT revenues, some HUF 180-190bn could be mainly attributable to better transparency, in addition to economic and consumption growth.
Speaking of experiences with EKÁER, the Minister said that until 20 September 2015, the number of enterprises which have registered at the system has reached more than 48 thousand.
Thanks to the system’s crime prevention effect, the discovered cases of fraud as well as other regulations which have been hitherto introduced, the Government has observed massive VAT revenue growth in the initial eight months of 2015. In this period, VAT revenues grew by 7 percent, or HUF 140bn, compared to the same period of the previous year, and that increase is attributable mostly to on-line cash registers and the EKÁER.
The new system has prompted a high number of inquiries internationally in the past months, which the Minister stressed he takes as another sign of success.
(Ministry for National Economy)
