The sectors most exposed to the crisis situation that has evolved due to the global coronavirus pandemic have received immediate relief from the government in the interest of the protection of the Hungarian economy and jobs. The central budget is surrendering some HUF 71,000 a month per worker earning the wage minimum determined for qualified workers in order to enable the businesses concerned to preserve the jobs of their workers, András Tállai, the Parliamentary State Secretary of the Ministry of Finance told the Hungarian news agency MTI on Tuesday.

The economy protection measures of the past two weeks will leave almost HUF 90 billion in the Hungarian economy, the State Secretary highlighted, adding that the government is currently working on the most overarching economic stimulus package of all time.

From among the economy protection measures, he mentioned the exemption of businesses in a difficult situation from the payment of the contributions on their workers’ wages for four months. He said in relation to the thirteen sectors in need of immediate assistance, including tourism, taxi services, domestic water transport, catering, entertainment, the media, the film industry, gaming, the performing arts, event organisation, and wellness and sports services, the government has adopted special regulations.

In these sectors, employers will be exempt from the payment of the contributions on wages for the months of March, April, June and July, while from among the contributions payable by workers only the 4 per cent health care insurance contribution in kind must be paid at the maximum rate of HUF 7,710, the State Secretary said, listing the tax relief measures.

Mr Tállai pointed out that these tax reductions provide major assistance for the economic actors most exposed to the harmful consequences of the coronavirus pandemic. Businesses are not required to pay the central budget the social contribution tax at the rate of 17.5 per cent and the vocational contribution at the rate of 1.5 per cent, while businesses are only required to deduct from workers’ wages the personal income tax and the health insurance contribution at the maximum rate of HUF 7,710. As a result, in the case of workers earning the wage minimum determined for qualified workers, the central budget is surrendering some HUF 71,000 monthly per person in order to protect the jobs of those working in the sectors concerned, he explained.

With a view to protecting jobs, the government is offering businesses the most practical possible assistance, the State Secretary said regarding the regulations. In the case of businesses active in the thirteen sectors most exposed to the harmful effects of the coronavirus pandemic, it is not the ‘paper’ (registered activities) that counts, but the activities actually carried on in the previous six months. As a result, it is irrelevant whether a company’s articles of association or any other records feature an activity eligible for preferential contribution payment or not.

The only fact that matters is the activity from which a given business obtained the majority of its revenues during the six months prior to 24 March. Exemption is granted if the amount derived from the so-called actual principal activity exceeded thirty per cent of the total revenues, and if the given activity is among the activities that are eligible for preferential contribution payment, the State Secretary underlined.

Mr Tállai said, according to the general rules, the four-month contribution exemption is applicable not only to individual entrepreneurs and normal businesses, but also to businesses paying their taxes under the ‘kiva’ regime reserved for small businesses as small ‘kiva’ businesses eligible for preferential contribution payment are not required to include the amount of payments to personnel in their tax bases.

(Ministry of Finance/MTI)