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Businesses will be negatively affected by the tightening of the detailed tax on small tax companies (KATA) starting next year, according to a survey conducted by the Budapest Chamber of Commerce and Industry (BKIK) in cooperation with various universities. The new KATA rules are feared primarily by companies operating in the intellectual field.
In his statement, Elek Nagy, President of BKIK, emphasized that KATA’s original goal is to reduce the administrative burden on small businesses and to launder the economy. However, experience has shown that there have been abuses, exacerbated by the coronavirus. The epidemic set off a cost-cutting chain reaction in several companies that wanted to reduce public burdens by outsourcing some of their employees to KATA contractors.
The BKIK president agrees with the legislator’s goal, the need for hardening to avoid hidden jobs, but finds the lawnmower-like solution problematic. The 40% surcharge on part of the amount invoiced to a customer of more than 3 million HUF in one year also affects those of the almost 400,000 KATA entrepreneurs who will be subject to the restriction through no fault of their own.
87 percent of those surveyed believe that employers should be involved in the process when preparing a proposed reform of the law.
Elek Nagy also explained that the type of tax originally created to activate the public charge of personal payments was not sufficiently harmonized with the temporary changes in the minimum wage (the minimum wage was 98 thousand HUF in 2013, compared to 161 thousand HUF this year) and their contributions to social security. The income limits were raised from the original 6 million HUF to 12 million HUF without any change in tax rates, including social security.
According to BKIK Consultation can prevent businesses from becoming impossible due to KATA toughening.
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