According to the changes of the act of the local business tax adopted on 26 November 2020, taxpayers have to submit their tax return to the tax authority, which means that what was an option until the end of the 2020 year, has become an obligation. As of 1 January 2021, the tax authority supervises and verifies the tax returns and also indicates immediately the calculation errors to the taxpayers, which can be corrected by correction or self-audit.
It is also worth mentioning the temporary reduction of the local business tax rate as a part of the recovery measures introduced as a result of the economic difficulties caused by COVID pandemic. In the tax year ending in 2021, the entrepreneur – as defined in the act of the local business tax – with a net turnover or balance sheet total not exceeding HUF 4 billion (micro-, small- and medium-sized enterprises) has to pay no more than 1% local business tax (instead of the maximum of 2%). The entrepreneur covered by the rules should pay 50% tax advance due on the given advance payment dates. A special declaration must be submitted to the local government to take advantage of this tax reduction until 25 February 2021.