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Tax trends for 2012 in Hungary

Thanks to the fact that all Hungarian tax rates will raise in 2012 except car registration tax, Hungarian average tax burden will grow in the next year.

15 December 2011

Hungarian average tax burden will grow in the next year

Hungarian average tax burden will grow next year


Whilst more and more indirect tax rates of products and services increase worldwide, corporate tax rates have been continuously decreasing for a decade. In Hungary, both tax rates follow international trends, but almost all tax increases - Hungarian average tax burden will grow - in the next year said Csaba László, tax partner of KPMG at the company's press conference in Budapest.

The former finance minister on launching of KPMG's annual publication of Corporate and Indirect Tax Survey 2011 said that the global corporate tax rate has fallen from 29% to 22.96% in avarage for a decade while the indirect tax rates have been relatively stable around 15.41% for 3 years.

Tax trends for 2012 in HungaryInternational trends

Csaba László added that Hungary follows international trend in both tax - corporate tax is lower than the international average, for instance - but 27% of Value-added tax rate in 2012 will be the highest in the European Union. Also, he emphasised almost all tax increases and Hungarian average tax burden will grow in Hungary next year.

According to global study by KPMG, corporate tax rates - except in the European region where they has increased from 19.98% to 20.12% - have declined around the world since 2010, but the period of steep decline comes to end soon - said Csaba László.

Change priority

He thinks that the corporate tax rate in Hungary has been below the international average for years. First, it has served to attract foreign investors into the country, but tax competition with neighbouring countries also called for declining in tax rate.

Csaba László , who was Minister of Finance in 2002-2004, considered tax system today has lower priorirty in a country's competitiveness when most countries aim to survive in crisis. But labour costs, country risk, legal & regulatory environment and predictability are much more appreciated in recent years.

Answering to question he explained that Budapest expects HUF40 billions from local business tax if they accept increase up to 2.5% for 2012. " It would have serious impact on companies that must have hard days in Budapest." - added.

 

Crisis taxes in Hungary - Need to be eliminated

Crisis taxes in Hungary - Need to be eliminated

The Hungarian way

The Hungarian way is very special in terms of taxation because crisis taxes have significant proportion in generating revenues (for the government) like nowhere else. If there has been some idea of how to raise taxes all around the world in recent years, Hungary has been happy to introduce it - mentioned by Csaba László.

He set out that the government had already planned last summer to introduce a uniform 10% corporate tax from 2015, but it has fallen into oblivion recently. The former Minister of Finance thinks that it would be difficult to bring the corporate tax down to 10%, though the agreed cardinal tax code specifies a single corporate tax while the rate is still unknown.

Bank tax is a very special major revenue item in state budget that its subsequent disposal of the situation should be treated with some new revenue sources.

But special taxes need to be gradually - not in equal proportion - be eliminated in near future - said Csaba László.


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