Amid a state of emergency, Hungary has introduced tax relief measures that the Finance Ministry says will leave HUF 200 billion (about $612 million) in the hands of businesses and individuals.
“Preserving and protecting workplaces is the most important goal, in the interests of which the government is assisting enterprises with job preservation funding, credit, guarantee instruments, capital replacement, and tax measures,” said Finance Minister Mihály Varga on Hungary’s national radio April 21.
Under an April 21 emergency decree, 600,000 businesses may delay the submission of their tax returns and annual reports from spring until September 30. This is meant to give businesses more liquidity to ride out the coronavirus crisis, Varga said, adding that the reporting deadline extension does not apply to banks, insurance companies, investment companies, and stock market companies.
Hungary will also allow all businesses to request a reduction, payment in installments, or payment deferral for up to HUF 5 million in tax, he said.
On April 17, the Finance Ministry announced a 2 percentage point reduction in the payroll tax rate — often called the “social tax” — to 15.5 starting July 1. Varga said the move “will leave some HUF 160 billion in the pockets of enterprises during the second half of the year.”
Also under the emergency decree, employers will be required to pay the monthly HUF 7,710 healthcare contribution for their employees who are on unpaid leave.
The rate of the small business tax rate, known as KIVA, will decrease from 12 percent to 11 percent in 2021. Varga said the move will save over 50,000 businesses about HUF 10 billion total next year.
Tax measures to benefit the struggling tourism industry include suspension of the tourist tax for commercial accommodations until December 31 and a reduction in the tax rate employers pay on the Széchenyi Recreation voucher card (SZÉP) from 32.5 percent to 15 percent. Employers may also contribute more to the SZÉP card, which can be used to pay for recreation, lodging, and catering.
The latest measures follow the April 6 announcement by Prime Minister Viktor Orbán of a $30 billion economic stimulus plan and a HUF 2 trillion coronavirus relief fund to be financed in part by a new tax on banks and multinational chains.