• Tax changes 2021

Tax changes 2021

14 October 2020

Please be informed, that based on the information published by MTI, the Economy Protection Operational Group (‘GOT’) has proposed significant tax reliefs focusing on the decrease of tax administration. The parliament may discuss the tax proposal by October. In the framework of our current newsletter, we would like to inform you about the main tax related amendments of the proposal.

The main purpose of the proposal is to decrease the tax related administrative tasks of the tax payers. This means that the tax authority will not only prepare draft VAT returns for the companies next year, but there might be simplifications introduced regarding the settlements of tax obligations and filing of local business tax returns.

According to the rules of online invoicing effective from the 1st of January 2021, the scope of transactions - in connection which the companies need to fulfil reporting obligations - will be broadened. Based on the data reported by the tax payers, the tax authority will have sufficient data available to prepare draft VAT returns. Based on the information provided by Norbert Izer, the Ministry of Finance’s State Secretary for Tax Affairs, the tax authority might provide a draft VAT return to about half million companies starting from the second half of 2021.

A further simplification would be provided to the companies by duplicating the thresholds applicable to automatic instalment payments. If this amendment would be accepted by the parliament, the threshold applicable for 12-month instalment payments free of surcharge would be increased to HUF 1 million for individuals and to HUF 3 million for companies classified as reliable taxpayers. In order to apply for the instalment payment, taxpayers only need to submit a simple request to the tax authority.

The tax proposal of GOT focuses also on the simplification of the local business tax returns. According to the amendments, the local business tax return filing obligation may be met by the filing of only one tax return to the National Tax and Customs Administration instead of filing tax returns one by one to all the municipalities where the taxpayer has local business tax obligation. If this amendment would be accepted, the National Tax and Customs Administration would forward the data regarding the local business tax obligation of the companies to the municipalities.

Beside the above mentioned simplification measures, the tax proposal also aims to make the administrative proceedings at first instance duty free from 2021. This would mean for example that taxpayers would be able to apply for a tax leniency application duty free instead of paying the current duty amount of HUF 10 thousand.

The proposed simplification measures summarized above might affect all the companies, but the tax proposal of GOT includes also recommendations which would support the industries most hit by the coronavirus-crisis (hotels, travel agencies). For example, the so called intermediate sellers would be exempted from the payment of the tourism development contribution. Furthermore, start-up companies may rely on personalised tax related support for a longer time, as the tax proposal recommends also to extend the half year period of the so called mentoring.

The application of small business tax could also be more attractive next year, not only because the tax rate will decrease from 12 percent to 11 percent, but also because the tax proposal of GOT recommends to increase the income threshold from one to three billion HUF and the exit threshold from three to six billion HUF. 

Summarizing the above mentioned, the tax proposal of GOT includes significant simplification measures for the companies. We will continuously keep you informed about the tax related amendments proposed to the parliament and the details of the regulations which will enter into force. Should you need any further information on the above, please do not hesitate to contact the tax team of BDO Magyarország Adótanácsadó Kft.