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VARGA ANNOUNCES TAX CUTS, GROWTH INCENTIVES

 

Finance Minister Mihály Varga has announced a number of tax cuts and growth incentives as part of plan to shield the economy from the impact of a global slowdown. Varga said the payroll tax would be reduced from 19.5% to 17.5% from July 1, 2019. The measure, which he said would leave 144 billion forints (EUR 443.1m) with businesses this year and 156 billion next year, is in line with an agreement reached by the government with employers and unions that links payroll tax cuts to private sector wage growth from 2019. Varga said the advertising tax would be reduced to 0 until the end of 2022. The government also wants to reduce the Small Business Tax (KIVA) rate from 13% to 12% from January 1, 2020. The measure would leave 5 billion forints with the some 40,000 businesses that opt to pay the tax, he said. The KIVA rate is well over the 9% corporate tax rate, but KIVA companies enjoy a number of exemptions.
Varga said tax administration would be reduced. The Simplified Business Tax (EVA) will be phased out, while other taxes will be consolidated, he added. He said rules requiring some companies to pre-pay their taxes in instalments would be eliminated. Varga also announced plans to reduce the VAT rate on commercial accommodations from 18% to 5%, while at the same time introducing a 4% tourism contribution in the sector.