Hungarian lawmakers have passed legislation on the reduction of the social contribution tax with 155 ‘yes’ and 27 ‘no’ votes on Tuesday,.
Under the amended law, the social contribution tax will be lowered to 19.5% from 22% as of 1 January 2018, which is an 0.5 percentage point larger reduction than planned. In parallel with the change, the rate of the health care contribution will also be cut to 19.5% from 22%.
We need to remind you that this is not an unexpected contribution reduction, as it had been part of a six-year wage agreement signed a year ago and linked to the wage increase.
Under the law, the base of cash benefits available for full-time small taxpayers will be raised to HUF 94,400 and to HUF 158,000 if a higher-sum itemised tax is paid.
Rules on the simplified contribution to public revenues (EKHO) will also be modified, as a result of which the rate of the contribution payable by the paying agent will be lowered to 19.5% from 20%.
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