Further, the tax authority will switch to helping taxpayers who make errors on their returns rather than punishing them. The measure sponsored by Economy Minister Mihály Varga passed with 131 MPs in favour, 38 against and 25 abstentions.

The law raises the revenue threshold for the itemised tax for small businesses, known by its Hungarian acronym “kata”, from 6 million forints to 12 million from next year and the threshold on total assets for companies already taxed under the small business tax, known by its Hungarian acronym “kiva”, to 1 billion forints.

The threshold for companies that first opt for kiva remains at 500 million. It reduces the number of rates for the healthcare contribution, known by its Hungarian acronym “eho”, to two (14% and 27%) from five ranging from 6% to 27%. A

dditionally, it exempts earned interest from the tax. It introduces a tax preference for investors in start-ups up to 20 million forints annually over four years.

The change could bring start-ups 40-60 billion forints in investment money, the economy ministry said earlier. Other tax preferences the law introduces include ones for live music and for investments that improve energy efficiency.

Republished with permission of Hungary Matters, MTI’s daily newsletter.

MTI photo: Bruzák Noémi