Hungary to lower taxes, abolish surcharges in two sectors
Minister Varga has said tax reduction and tax simplification will continue in 2022, as well. A bill on tax reliefs is to be submitted to Parliament shortly.
The package of measures consists of the following main elements:
- labour taxes will be lowered: as of July 2022, the rate of the social contribution tax will be cut to 15%, and the vocational training levy will be incorporated into the tax while the benefits will be maintained therefore labour taxes will be reduced by two percentage points. The tax regime will be simplified further, leaving HUF 250 billion at businesses annually;
- the flat-rate taxation scheme will be more convenient and cheaper, and it will be optional for up to ten times the annual minimum wage or fifty times the annual minimum wage in case of retail services. This way the taxpaying business owner will not have to pay personal income tax up to half of the annual minimum wage, and will also be left with the option to avail of the tax breaks for families. This measure will support 70,000 businesses;
- as a third step, market players actively helping to reboot the economy will be supported: as of next year, venture capital fund managers and stock exchanges will be exempted from their special surcharge;
- energy suppliers will be able to deduct their losses from their pre-tax profits in the next five tax years;
- last but not least, the government is to take a major step towards whitening income stemming from cryptocurrencies, with a plan to lower the tax rate on income from cryptocurrencies to 15% from 30.5% currently. This measure could generate several billions of forints of revenues for the budget.
Varga said the bill to be submitted to Parliament shortly is part of the government’s pro-family and pro-business economic policy.
Hungary needs an assisting, stimulating, and supportive fiscal policy up to 2023, stressed Varga in an interview with Portfolio published on Monday. 2022 will be a year of restarting the economy therefore the reduction of the budget deficit will be slower than what the Fiscal Council would see advisable, he added. The ministry has not identified problems that would require measures in 2022 to cool off an overheated economy, he said, adding that the 2019 growth level would be reached in the second quarter of next year. In the interview we also addressed the future of the loan repayment moratorium, the longevity of fiscal rules, the government’s decision in respect of the EU’s Recovery and Resilience Fund (RRF) and chances of Hungary adopting the euro.
Cover photo: Ákos Stiller / Portfolio
