The number of KATA taxpayers who were previously on another company’s payroll has risen sharply since the tax was introduced in 2013, suggesting that some companies are moving employees off payroll and paying them as “independent contractors” to avoid taxes on labour.

KATA taxpayers who earn up to 12 million forints (EUR 34,600) a year may pay a flat monthly 50,000 forints instead of corporate or payroll tax.

MKIK chairman László Parragh told the paper the chamber is proposing slapping a tax of up to 40% on companies that pay individual KATA “contractors” more than 3 million forints a year. He noted that, at present, KATA contractors are required to submit data on parties with whom they do more than 1 million forints of business annually.

MKIK is recommending that KATA be made progressive and the monthly payment be raised to 65,000 forints on income over 6 million, Parragh said.

The chamber also wants tax authorities to use the information at their disposal for a targeted crackdown on businesses abusing the tax form, he added.

He said the recommended measures should come into force no earlier than January 1, 2021.