As part of the economy protection action plan announced in May, two measures took effect on Wednesday. With the cancellation of the obligation of tax advance replenishment, the administration of businesses will become even simpler, while with the extension of the development tax benefit more projects could be implemented in Hungary.

The government launched the economy protection action plan in order to preserve the results of the Hungarian economy even in the ever-slowing European economy and to ensure that the domestic growth rate exceed the EU average by minimum 2 percentage points also in the coming years, the Finance Minister highlighted.

According to his information, the cancellation of the obligation of tax advance replenishment will make business easier for some 40,000 enterprises as this will enable them to use HUF 170 billion for business purposes for five more months.

The businesses concerned will be required to pay their taxes in May, simultaneously with the preparation of their tax returns, rather than by 20 December, Finance Minister Mihály Varga said summarising the essence of the measure.

Earlier companies with a net sales revenue of more than one hundred million forints were required to estimate their corporation tax for the given year, to pay an innovation contribution and the income tax of energy suppliers, and to transfer minimum ninety per cent of the sum to the central budget by 20 December, the Minister observed.

This is one of the most important points of the economy protection action plan comprised of 13+1 measures as the postponement of the deadline for tax payment could help the businesses concerned to implement developments or to create jobs, he added.

Speaking about another point of the economy protection action plan that took effect on Wednesday, he said the limit for entitlement to a development tax benefit for small and medium-sized enterprises will decrease to HUF 300 million in the case of small businesses and to HUF 400 million in the case of medium-sized enterprises.

The reduction of the investment limit could concern some 7,000 businesses, but this number could rise significantly by 2022 as the limit will decrease year after year: in 2022 the limit for small businesses will be HUF 50 million, while in the case of medium-sized enterprises, the investment limit for eligibility for a tax benefit will come down to HUF 100 million, the Finance Minister said.

Last year, a record number of investments were implemented in Hungary to the value of HUF 8,500 billion, and the extension of the development tax benefit could significantly contribute to the maintenance of the current favourable process, Mr Varga said.

A further important part of the economy protection action plan is the reduction of the social contribution tax by 2 percentage points which already entered into force on 1 July. This year alone this will leave HUF 144 billion more in the pockets of Hungarian businesses, and an extra HUF 156 billion next year. The reduction of the tax of small businesses will take effect on 1 January 2020; the small business tax will decrease from 13 per cent to 12 per cent, benefiting more than 40,000 Hungarian businesses and leaving a further HUF 5 billion with them, the head of the Ministry of Finance stressed.

(Ministry of Finance/MTI)