One eye laughing, the other eye weeping

According to experts from PriceWaterhouseCoopers Kft, some players in the FMCG sector might be able to reclaim VAT, while the burden on enterprises employing several hundred people could be reduced substantially as a result of new tax measures. The VAT rate is to be increased from 20 to 25 percent as of 1. July, while a 18 percent rate will be applicable to some basic foods, like milk and bakery products. – The basic problem is that manufacturers like bakers purchasing ingredients with a 25 percent VAT will have to wait for 30 or 45 days for the refunding of VAT and might also be subjected to an inspection causing a further delay– explains Zsolt Tenczer. The necessity for temporary financing of VAT could also lead to a competitive disadvantage for exporters, as the periods required for VAT refunds are much shorter in neighbouring countries. APEH inspections in connection with discounts and promotions are becoming more frequent, while there is still no universal guideline for the interpretation of VAT regulations introduced in 2008. The same is true regarding VAT accounting of bad debts, although a drastic increase in non-payment has taken place. The lowest income tax rate will be applicable up to an annual income of HUF 1,9 million, instead of 1.7 million. However, the overall tax burden will increase as a result of other incomes being subjected to tax. Sickness benefit is to be reduced by 10 percent. Social security contributions are to be reduced from 32 percent to 27 percent up to a limit equal to the double of the minimum wage. The threshold for the application of Simplified Entrepreneurial Tax is to be lifted to HUF 26 million.