Accounting 2.0 – changes in the financial institutions sector
At a seminar Deloitte organised for the financial sector on the latest developments, important legislative changes and new opportunities. Experts spoke about the positive influence the Lending for Growth Programme and the new laws in the Civil Code had on financing. On the contrary, the act on bank accountability and the new retail regulations (Sunday closing, advertising tax) reduced the capacity of enterprises to pay back loans. The new Civil Code took matters in a positive direction, making financing easier and increasing legal security in the domain of enforcing guarantees. In the new Civil Code pledge is the most important among various types of collateral. New types of collateral have also been introduced in order to offer bigger protection to lenders. It is quite a task for banks and leasing companies to settle VAT matters in accordance with the law on the conversion of foreign exchange loans: the problem is that the law doesn’t include the relevant steps to be taken – the Ministry for National Economy (NGM) is only finalising its position on this matter now. Another problematic area for financial institutions can be managing the VAT matters of portfolio transactions. As NGM examines such contracts very strictly, banks need to evaluate these transactions individually and pay special attention to meeting requirements in terms of both form and content. In the field of personal income tax, the tax-free releasing of bank claims and the proving of implementing the tax-free disposal put great administrative burden on those making the payment. The Hungary-USA social security agreement is awaiting ratification. If it isn’t given a green light until 30 June 2015, US citizens who have been seconded to Hungary for years will have to pay social security contributions. Back in November 2014 a government decree came out on the usage of International Financial Reporting Standards (IFRS) for annual reporting purposes in Hungary: it made using IFRS mandatory for financial institutions and optional for others (financial enterprises, insurance companies). The government set the 31 May 2015 deadline for introducing the new rules, the goal of which is to reduce the administrative burden. In connection with putting the Foreign Account Tax Compliance Act (FATCA) – which has been introduced by the USA – into practice, the US tax authorities published guidelines in December 2014. These guidelines make it clear that in the case of a country which has already made great progress in the process of signing the FATCA agreement with the USA, the FATCA assessment of the financial institutions of the given country won’t change as long as the county keeps making great efforts for signing the agreement. It was also discussed at Deloitte’s forum that recent changes in taxation – modifying the system of the food chain supervision fee, a growing administrative burden because of the Electronic Trade and Transport Control System (EKÁER) – can generate tax risks which can affect the ability of companies to pay back loans.
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