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The Economic Protection Operational Court (GOT) ruled this week on major tax breaks focused on significantly reducing the tax bureaucracy. Working for companies, the tax office will offer a draft VAT return next year, but will also simplify the tax debt settlement and local business tax return system, reported MTI Izer Norbert, Secretary of State for Taxation at the Ministry of Estate.
The administrative costs of the companies related to the main types of taxes are approximately 420 billion, which means that farmers spend 1.7 percent of their sales on the tax bureaucracy. According to the Operational Court of Economic Protection, these burdens should be alleviated as soon as possible, since the tax administration is currently a cost of the order of magnitude for the commercial tax.
Of the GOT decisions, Norbert Izer was the first to highlight the recommendation of the tax office for draft VAT returns. Starting in the second half of 2021, the authority will prepare a draft VAT return for approximately half a million companies. The simplification of the payment of tax debts was also discussed at the last meeting of the GOT. The panel has doubled the current automatic installment payment limits. If Parliament approves the proposal, next year people can claim up to 1 million HUF in debt, and companies classified as trustworthy based on their tax history can request a 12-month installment payment with no installments on their debts, to which only has to present a simple request to the tax office.
One of the GOT tax relief decisions, which exempts so-called middle sellers from contributing to tourism development, can also directly help the industry players most affected by the coronavirus crisis: hotels, travel agencies. If voted by the National Assembly, the measure could leave approximately three billion guilders for some two thousand companies operating in the tourism sector. Startups can count on personalized tax assistance for longer, as the GOT has decided to double the six-month period of so-called mentoring. One of the board’s key proposals to simplify the local business tax return system for some 94,000 businesses with multiple sites, who will not have to file their local business tax returns with all the municipalities involved, will be enough to send a single one to the tax office. The data will be forwarded by the agency to the relevant municipalities, he said.
More than one and a half million cases from the public administration will be free next year. Starting in 2021, first instance administrative procedures will be tax-free, so, for example, companies will also be able to apply for tax equity, which now costs HUF 10,000. But there is no fee to pay for a certificate of residence in the common home or the suitability of the establishment, explained the Secretary of State. With the measure, not only can HUF 5,000 million be left for families, the population and companies, but the administration will also be faster.
The small business tax (kiva) will be even more favorable next year, not only because the tax rate will be lowered to 11 percent, but also because even more businesses can choose the most competitive type of tax in Hungary. The income threshold has been increased by the current GOT from one to three billion guilders, and its output from three to six billion guilders. More than 52,000 divided businesses are now on file with the tax office, but due to favorable changes, this number could increase significantly, the secretary of state said.
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