“From the middle of next year, the tax office will be immediately informed of most occurrences within the Hungarian economy thanks to the fact that company invoicing will be directly linked to the authority - the most important details concerning fifty trillion forints (EUR 162bn) worth of transactions will appear immediately on the authority’s computers, and the chances of successfully avoiding taxes will drop to a fraction of the current level”, the Director of the National Tax and Customs Administration (NAV) said in an interview for Hungarian daily Magyar Idők.

András Tállai also spoke about the fact that a few days ago the European Commission had launched proceedings against Hungary with relation to another measure designed to combat the black economy, the Electronic Trade and Transport Monitoring System (EKÁER). “The Hungarian Government will not renounce tax cuts and wage increases even if Brussels sides with the tax evaders”, the Minister of State for Parliamentary Affairs and Taxation and Deputy Economy Minister emphasised.

“The latest major measure to combat the black economy, the online invoicing system, will come into effect in a little over six months’ time. The provision of data will be automatic and the National Tax and Customs Administration will be in possession of the relative information within 24 hours of invoices being issued”, he told the press.

“This will involve no extra duties on the part of entrepreneurs, all tasks relating to the flow of data will be performed by computer software”, Mr. Tállai added. “The system opens up previously unavailable opportunities in the fight against tax fraud”, the Deputy Minister said, adding: “The NAV could receive data relating to fifty trillion forints worth of transactions every year, and immediately. This means that the authority could uncover tax-evaders while they are in the process of committing fraud, which in turn will prevent the treasury from suffering financial damage”. “Fictive invoicing and serial intentional bankruptcy, which have previously caused major damage, could become a thing of the past thanks to the new measures”, the head of the tax authority said.

Online invoicing will supplement the two previously introduced measures to combat the black economy, the online cash register system and the electronic trade and transport monitoring system. These two measures have resulted in 420 billion forints (EUR 1.4bn) in extra revenue for the national treasury within a short period of time, fraudsters have disappeared from several sectors, and the European Commission recently specifically highlighted and praised these results. In contrast, news last week that Brussels is launching infringement proceedings against Hungary because of the EKÁER system were practically a bombshell. According to the Commission, the Hungarian system, which tracks the route of freight vehicles and their consignments, and accordingly is effective against several forms of tax evasion, contravenes EU tax (VAT) regulations. As a result, in the Commission’s view the anti-fraud system contravenes the fundamental EU principle that guarantees the free movement of goods within the European Union.

“The Commission’s decision is senseless and extremely dangerous”, Mr. Tállai said with relation to the above. “It is incomprehensible how it can come about that what the Commission praises and puts forward as an example one week, it can then brand as a grave error the following week. In addition, it is dangerous because the EKÁER system plays a very important role in reducing Hungary’s black economy, and the system has been copied by several other EU countries, specifically in view of its effectiveness. It is one of the most important elements aimed at reducing fraud in Hungary’s tax policy. Amongst others, this system is what provided collateral for the tax cuts the Government has implemented in recent years”, the Deputy Economy Minister said.

“Today, Hungary has the lowest level of corporation tax in Europe and the second lowest rate of personal income tax, small Hungarian enterprises are paying an unprecedentedly low level of tax, and this year has seen the introduction of a reduction in contributions that will lead to a 10-20 percent increase in wages. By attacking the EKÁER system, Brussels is endangering these measures”, he declared, stressing that “The Government will not be changing its tax policy and its policy of wage increases even for the European Commission”. “Tax increases and the freezing of wages will never occur in Hungary, not even if Brussels sides with the tax-evaders”, he underlined.

(Magyar Idők/MTI)