Business 23 March 2016, 1:51pm

Hungary expands use of online cash registers, out to combat black economy

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For some services in Hungary it will not be mandatory to use online cash registers (stadiums, hairdressers, beauticians, casinos), which means the expansion of the system will affect fewer businesses than expected. The Economy Minister cited preliminary assessments as the reason for this. At the same time, Mihály Varga on Tuesday announced two new measures aimed at battling the black economy.

They are the ones that dodged the bullet

Economy Minister Mihály Varga announced late on Tuesday that the use of online cash registers will be made mandatory for additional services in two stages, with a view to add 30 000 new cash registers to the existing ones. The preliminary estimate by the manufacturers of online cash registers was for the addition of 70 000 units.

Varga could not say yesterday how large additional revenues the government expects from the measure, but he estimated that it could be several tens of billions of forints. State newswire MTI noted that according to estimates, the 30 000 new online cash registers will boost budget revenues by HUF 20-30 billion.

The decision cannot be considered well-founded from a budgetary aspect as there are no impact studies or at least public estimates about its effects. Several questions arise with respect to the budget impact: How much revenues will the measure generate? What will the cabinet do with the funds? Will the government make it public if and on what it spends the extra revenues? An amendment proposal to the public finances act currently before Parliament suggests that the cabinet has other plans than to shout out to the world what it spends such funds on. If MPs nod on the proposal the cabinet will no longer be obliged to do so, either.

Varga said the use of online cash registers will be mandatory in the following areas as of 30 September 2016:

vehicle repair and maintenance;
retail sales of vehicle parts, sales and repair of motorcycle parts;
plastics surgery;
discos, dance halls;
cleaners, drycleaners
gyms (fitness facilities).

As of 1 January 2017, currency exchange services will also need to be equipped with online cash registers and cabdrivers and drivers of Uber will also need to provide online data of their revenues to tax authority NAV as of that date.

Varga also told the press conference that the ministry examined in consultation with the Hungarian Chamber of Commerce and Industry which sectors have the highest ratio of hidden income and expand the obligation to use online cash registers onto them.
As a result of probe, the measure will not be applied to hairdressers, beauticians and masseurs.
In this respect, local daily newspaper Népszabadság noted on Wednesday that lawyers and most of the doctors lobbied well because they will not have to buy online cash registers for about a hundred thousand forints apiece.
Varga acknowledged to the paper that they had originally wanted to make the use of online cash registers mandatory also for stadiums and sports grounds (ticket sales), but in consideration of the HCCI (MKIK in Hungarian) they have surrendered this plan.
The paper also wanted to know why of all the doctors only plastic surgeons will need to buy online cash registers, whereas dentists, for instance, will not. Varga said the ministry wants to implement the system only in sectors with a high ratio of tax avoidance, adding that the riskiest businesses were identified by the HCCI.
Casinos also dodged this bullet, although Varga announced proudly at the end of last year that the whitening of the economy by online cash registers will involve casinos too. The paper underlined that apparently some sectors had lobbied more successfully over the last 18 months than others. As a result of this, the casinos of former Hollywood producer Andrew G. Vajna, now the government's film commissioner, and Gábor Szima, who - along with Vajna, own all the casino concessions in Hungary, will be scrutinised less than small convenience stores, for instance.
Responding to a question the minister said they are in consultation with taxi companies on how to introduce online cash registers in cabs and the goal is to set up this system by 1 January 2017. One of the ideas is that the NAV would be provided information through the taxi companies, by connecting the meters to the tax authority, which would make the purchase of online cash registers unnecessary.

And this too

Varga also said that in order to combat the black economy the cabinet plans to reduce the use of cash Answering a question about electronic accounts the minister said the system would first be applied to companies with specific annual revenues.

Varga rejected the assumption that the additional tax revenues to be created by the measure would be used to offset the expenditures the cabinet’s new housing policy will lead to. He noted that the new family housing allowance triggered a 6% price increase (national average) on the home market and this is a more realistic level than before, in his view.