The October tax package
Due to the extended economic effects of the coronavirus epidemic, the October tax package announced by the Hungarian Government was aimed to stimulate the investing climate. According to the Hungarian ‘economic protection operational body’, there are three different ways to revive the economy, namely the tax reduction, simplification of the administration and boosting investments.
As a result, the small business tax (“KIVA” in Hungarian) will become even more advantageous from next year. After the Government reduced it to 12% (and to 11% from 1 January 2021), it has now been decided to double the revenue threshold to HUF 3 billion. In addition, as one of the tax relief decisions, intermediate sellers will be exempted from the tourism development contribution, which can also directly help the most affected economic sectors, such as hotels and travel agents.
About 1.5 million public administration cases will become free of charge, and from the second half of 2021, the tax authority will prepare the VAT returns for each company. Moreover, from 2021, all first-instance administrative procedures will be exempted from stamp duty. This seems to be a significant change, since the administrative costs of businesses related to the main types of taxes alone are about HUF 420 billion.