Hungarian Minister Links Tax Rates To Decline Of Black Economy

By Editorial 27 March, 2013

Hungary's new Minister for National Economy has credited the country's low tax rates with a decline in the black and grey economies, and hinted that a further cut in personal income tax may come under consideration in the months ahead.

Mihály Varga made the comments during a visit to the headquarters of the National Tax and Customs Administration (NAV). Speaking at a press conference, he confirmed that there were no current plans for a single-digit personal income tax rate, but added that the current flat rate – 16%, introduced in 2011 – needed a further six months before it could be properly assessed. Asked about VAT on basic foods, he said that it still needed to be determined which foods should be given a preferential rate.

Varga also reminded his audience about a temporary period during which those with foreign accounts could repatriate their funds without paying a punitive tax. He indicated the situation in Cyprus as a further good reason to take advantage of the opportunity, and he contrasted Hungary's approach of taxing banks with Cyprus's plan to tax account-holders.

According to Varga, recent tax measures had ensured the preservation of many jobs and supported families. However, he also acknowledged the need to meet projected revenues and expenditures in order to get the EU's Excessive Deficit Procedure lifted.

Varga observed that the NAV was responsible for 92% of state revenues, and he commended the body for uncovering 14,000 cases of fraud in 2012. NAV President Ildikó Vida added that the merger of tax and customs authorities had led to successful joint raids and criminal investigations, and that plans to improve supervision would protect taxpayers from competitive disadvantage.

Vida further described the current structure of the NAV as being optimal, and he highlighted extended opening hours at customer service centers.

Tags: Expatriates | Compliance | Tax | Value Added Tax (VAT) | Tax Compliance | Hungary | Food | Tax Authority | Tax Rates | Individual Income Tax |


News Archive