Economy 31 October 2024, 8:49am

Government to cut and phase out taxes - 2025 tax package before Parliament

Portfolio

The government is preparing major tax changes aimed at supporting families, simplifying the tax system and increasing transparency in the economy, the Finance Ministry said in a statement on Tuesday night. The government's plan, presented to Parliament, expands the family-friendly tax system through amendments to the tax bill next year, phases out some extra-profit taxes and promises cuts in administration. The ministry has expanded the draft tax package sent for public consultation in mid-October, but there are no major surprises in the Finance Ministry's proposal.

According to the draft presented by the Ministry of Finance (PM), the programme of doubling the family tax allowance will be introduced in two stages, from 1 July 2025 and 1 January 2026, which could mean a monthly allowance of HUF 15-66,000 per child for families, depending on the number of dependants.

As the draft shows, depending on the number of dependants,

the family allowance would increase to HUF 133,340 for one dependant,
HUF 266,660 for two dependants
and HUF 440,000 per month of entitlement for three or more dependants.

If the dependant is permanently ill or seriously disabled, this amount is increased by an additional HUF 133,340.

In addition, the reduced 5% housing VAT rate will be extended until the end of 2026, providing an opportunity for construction companies and families to facilitate home ownership. As already known, in connection with the home creation measures,

pension savings will also become eligible for housing for a period of one year, and the amounts on the SZÉP card can be used for new housing.

The new measures also include the extension of excise duty reductions for commercial diesel and agricultural diesel for hauliers.

The government also plans to eliminate the special tax on airlines from January 2025, and to abolish the special taxes on pharmaceuticals and telecommunications, which have so far imposed a significant burden on these industries.

The Communication does not mention it, but in another draft, the PM proposes to suspend the advertising tax for another year. Under the current rules, media companies are subject to a tax of 7.5% of their annual net turnover from taxable activities, which will not be paid under the draft.

According to the latest announcement, the rules on the transaction tax on cash payments will be changed in the spirit of the "economic whitening", and while it was an emergency measure, it is now permanent that the tax will only apply above HUF 50,000. Previously this threshold was HUF 20,000.

The restructuring of the National Tax and Customs Office's (NAV) organisation and supervision system will place major payment discounts under the responsibility of a central body. In addition, controls on road transport and metal trade will be strengthened. Changes to customs procedures also aim to place confiscated transport assets in police custody and to exempt certain businesses from tax if they are debt-free, as was already known under the mid-October draft.

The transparency requirements for companies will be amended by new requirements to check sustainability reports, as proposed in October. It also included new disclosure and qualification rules for auditors and firms, which will strengthen the credibility of sustainability reports and allow third-party monitoring of their legality.