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The Hungarian government supports SMEs through tax cuts and from budgetary and European Union resources, and tax discounts for small and medium entrepreneurships grow every year which is outstanding in international comparison, a government official said. The tax system also offers specific tax types, tax cuts and eases the administrative burden on SMEs, Norbert Izer, a state secretary of the finance ministry, told a press conference.
From January 2020, the Small Business Tax (KIVA) is cut to 12% from 13%, making it one of the most competitive rates in the European Union, Izer said. Nearly 50,000 entrepreneurs pay KIVA, he said. The revenue limit for users of the Itemised Tax for Small Businesses (KATA) was raised to 12 million forints (EUR 36,100) annually from 6 million in January 2017, which resulted in the tripling of the number of users choosing this tax form to 377,000, Izer said. Hungary also introduced the lowest corporate tax rate in Europe, 9%, from 2017, he noted. Some 723,000 firms with annual revenue below 12 million forints are exempt from paying VAT, he said.
In the 2014-2020 funding period, the government ploughed 60% of EU funding into economic development, Izer said. Its development and innovation programme has supported some 19,000 SMEs with 974 billion forints, he said.