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Ministry of National Economy of Hungary : Mihály Varga: The tax bill has four key objectives

10/30/2013 | 03:37pm US/Eastern

Before drafting the tax bill the Government had identified four main goals: easing the financial burden of families, improving business environment, cutting red tape and improving economic transparency, the Minister for National Economy announced at a press conference held in the Parliament.

Mihály Varga emphasised that next year's tax regulations will contribute to economic growth and bolster the creation of jobs. The lower burden of tax, contribution and duty payments as well as a better business environment, on the other hand, will facilitate employment and stimulate investment, the minister added.

Out of the package of proposals, which contains some 300 sections, Mihály Varga singled out that the extension of the family tax allowance will benefit about 260 thousand low-income families. He also said that asset transfer between married spouses will as of January 2014 be duty-exempt, in accordance with the Government's effort to reduce the burden on families.

A provision will support first-time home buyers, irrespective of their age, by allowing them to request from the tax authority a 12-month period for property duty payments free of extra charges. As a new proposal, as of next year residential area land of one hectare or less will not be subject to land tax provided it is under cultivation.

An amendment within the corporate tax act will stipulate that in case of a minor tax calculation error enterprises will not be obliged to request self-revision, and restaurant expenses will be deductible from the tax base provided they are paid for with a bank card.

In addition, the Minister stressed that as an amendment of the accountancy act, off-shore based enterprises or those with an intransparent ownership structure will be excluded from organizers of mandatory annual further training courses for accountancy service providers.

As far as the vehicle registration tax is concerned, paper-based tax certificates will be abolished.

He also stressed that the rate and conditions of the bank tax will not change in 2014.

Responding to a question the Minister said that the Government's relief package for foreign currency debtors will soon be submitted to Parliament, as the proposal of the Hungarian Banking Association is not sufficient. As he remarked, professional negotiations within the central administration are still going on, and he has not disclosed the exact date of presenting the scheme. He emphasised, however, that besides the already well-known priorities, such as foreign currency home mortgages shall be phased out and borrowers with forint debt shall not end up in a worse position than those with foreign currency debt, the Government proposal will include some other guidelines as well.

"I have nothing more to add," Mihály Varga said, "We have been working on the issue and the decisions are about to be made." He added that the letter of the Banking Association had been falsely addressed, as it should have been sent to bank clients instead of the Government. In his opinion, over the past weeks several court verdicts have been announced which should have been adopted by the banks without the interference of the Government. As an example, the Minister mentioned the Curia decision with regard to exchange rate differentials.

As a response to another question he said that another proposal is designed to aid financially troubled families, as it recommends that debt remitted by a bank shall be tax-exempt even if the loan at issue is not secured by a home mortgage. Credit institutions will also be relieved of the obligation to calculate income from preferential interest rates as taxable income.

According to the calculations of the Ministry, Mihály Varga informed journalists, in light of experience over the past months in 2014 more taxpayers will opt for the small enterprise tax (KIVA) and the fixed-rate small enterprise tax (KATA) and thus revenues from the simplified entrepreneurial tax (EVA) will be halved in 2014.

He also stressed that the contribution subsidies for low-income families - estimated at HUF 53-55bn - do not cause a shortfall within the social insurance account, as a GDP growth of 2 percent will cover this gap.

(Ministry for National Economy)

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