Magazine: Simpler tax rules in 2016

In its report PwC stressed that one of the most important changes in tax rules from 1 January 2016 is that the International Financial Reporting Standards (IFRS) for annual reporting purposes are introduced in Hungary. The IFRS system isn’t mandatory for every company and Gabriella Erdős, senior partner at TaxMind Kft. told at a conference organised by Világgazdaság that those who can should skip using the new system. However, firms which have an international parent company will find it hard to do so.

As of 25 June 2015 a new concept, tax credit for growth was introduced in Hungary. This forms part of the corporate tax regulation: companies that increase their pre-tax profit five times within a year may defer the payment of tax on the profit increase. They may perform deferred tax payment within two years following the current year.

In 2016 two new tax categories are introduced. Reliable taxpayers can enjoy tax credits while those deemed to be unreliable will be subject to even stricter rules than before. The bad news is that Ms Erdős is of the opinion that not many taxpayers will qualify as reliable, as 10 very strict conditions must be met. Yet those who manage to meet these will profit from considerable benefits. There won’t be many unreliable taxpayers either because the HUF 100-million limit in unpaid taxes is a rather big value.

Environmental protection product fee: this is one of the key tax matters in the FMCG sector. One of the most important changes in this domain, in the opinion of PwC, is that in the case of selling products outside of Hungary the seller can be exempt from paying the fee if the product is transported directly to another country from the first domestic seller.

From 2017 those subject to paying a local business tax can also make their declaration using to the tax authority’s (NAV) form in electronic-format. An R&D tax credit will also be introduced in the local business tax system: taxpayers can reduce their tax base with 10 percent of the sum they invested in research or development in the given year.

PwC also called attention to several smaller changes in the tax rules. For instance in the future road toll paid both in Hungary and abroad can’t only be deducted from the tax base as an expense, but 7.5 percent of the sum can also be used to lower the base of the local business tax.

Changes in connection with the food chain supervision fee: the category-based fee system that was used in 2015 is discontinued and from this year the fee is calculated from the sales of the previous calendar year (calculated without excise duty and the public health product tax) – enterprises will have to pay 0.1 percent.