Over 315 thousand entrepreneurs have already chosen the small taxpayers’ itemized tax, the so-called KATA, which is now Hungary’s simplest and most popular form of taxation.

“In addition to the existing benefits, small taxpayers can expect a further reduction in taxes this year in view of the fact that from 1 January the income limit below which they can choose VAT-exemption, meaning below which they do not have to charge or pay VAT, will be increased from 8 million to 12 million forints”, Mihály Varga announced.

The Minister of Finance told reporters that all small taxpayers will be receiving a letter from the tax office in electronic form within the next few days, explaining the changes.

Mr. Varga drew attention to the fact that the Government is offering a range of special forms of taxation to businesses, which thanks to the Government’s policy of reducing taxes, are becoming increasingly favourable. He pointed out that the income limit for the KATA tax doubled in 2017 from six million forints to twelve million forints. “The facilitations for small taxpayers are continuing this year: the threshold for VAT-exemption has increased by 4 million forints from 8 million to 12 million. As a general rule, businesses that are VAT-exempt do not have to charge or pay VAT and do not have to submit a VAT tax statement”, the Minister detailed.

“Thanks to government measures aimed at developing the tax system, Hungary has the lowest level of corporation tax in Europe and the third lowest level of personal income tax, in addition to which businesses have several favourable forms of taxation at their disposal. Furthermore, this will be third year in which the tax office prepares the personal income tax returns of private individuals itself, the goal being to reduce the administrative burdens on businesses”, Mr. Varga pointed out.

The Minister told reporters that since the introduction of the small taxpayers’ tax in 2013 it has become the country’s most popular form of taxation thanks to the fact that with the payment of 50 thousand forints-a-month, entrepreneurs free themselves from the burden of corporation and personal income tax, as well as healthcare, pension and social contributions. “In addition to providing the greatest savings for entrepreneurs and reducing administrative burdens, this form of taxation is also extremely flexible. In 2019, small taxpayers who choose VAT-exemption will only have to submit a single tax statement, and even that only in 2020”, the Minister said.

(Ministry of Finance)