“Hungary has moved up thirty places compared to last year in the World Bank’s Paying Taxes rankings, meaning it is now in 56th place. The improvement is predominantly the result of the government’s policy of reducing taxes, the major decrease in administrative burdens, and the tax office’s increasingly efficient monitoring practices”, State Secretary for Tax Affairs Norbert Izer said in a statement to Hungarian news agency MTI.

Mr. Izer recalled the 2018 tax cuts, thanks to which Hungary moved forward from 86th place to 56th place in the Paying Taxes ranking published by the World Bank on Tuesday.

He pointed out that from 1 January 2018 social contributions tax was reduced to 19.5 percent, leaving 200 billion forints (EUR 596 million) with enterprises last year alone. “Favourable changes also directly affected SMEs, thanks to the fact that small business tax (KIVA) was also reduced to 13 percent last year. As the rate of the KIVA tax fell, so the popularity of the KIVA increased”, the State Secretary noted. “While 6500 businesses chose the KIVA tax in December 2016, this special form of taxation is now used by 41 thousand businesses”, he said.“In its report, the World Bank also highlighted the importance of the simplification of the tax system”, the State Secretary said, moving on to administration-reducing measures. He verified the fact that for a majority of enterprises this not only meant a reduction of bureaucratic burdens, but also significant savings, with a favourable change that was introduced on 1 January 2018, according to which the deadline for the transfer of VAT refunds was reduced from 45 days to 30 days. In practice, this means that since 1 January 2018 all individual entrepreneurs and some 234 thousand enterprises that have been classified as dependable with relation to taxation, are receiving the VAT refunds they have requested from the state within 30 days. The tax office, which is entrusted with protecting the interests of treasury revenues, is also playing a significant role in this in view of the fact that it has only thirty days to examine the validity of tax refund requests.

“The continuously expanding electronic services and online systems provided by the National Tax and Customs Office not only assure that those affected receive their money more quickly, but also assure a much more efficient monitoring system that operates on a more precise and targeted basis”, the State Secretary said in summary. “The accuracy of risk analysis is increasing year by year. The tax difference (hidden tax) determined per tax inspection has increased significantly, by 22 percent. Last year, tax inspections determined an average level of hidden tax of 16 million forints (EUR 47,700), while this year the figure has increased to 19.5 million (EUR 58,150)”, the State Secretary detailed.

“Client-centric inspections have also led to a marked improvement in Hungary’s ranking”, Mr. Izer underlined, explaining: “World Bank experts have determined that in Hungary typically only cheating, tax-avoiding enterprises can expect to be investigated by the tax office, while honest taxpayers cannot, and the results of previous years were also modified retroactively”. “Hungarian enterprises are paying Europe’s lowest rate of corporation tax (9 percent). The policy of reducing taxes has significantly contributed to enabling the Hungarian economy to enter a growth trajectory and perform well above the European Union average. Since taxes have been decreasing, the economy has been growing, and both wages and employment have also been increasing. Accordingly, the reduction of taxes and administrative burdens on enterprises is also an important part of the Economy Protection Action Plan”, the State Secretary declared.

(MTI)