Posted by: Ernst-Jan de Roest Posted on: Thursday 15 December 2011, 13:53

The government presented Proposal T/4662 (“the Proposal”), concerning the modification of some tax regulations and regulations pertaining thereto. In this newsletter, Mazars briefly summarize the most important modifications that are anticipated as of 1st January, 2012.

Personal income tax

In 2012, the adjusted tax base will not be applied up to an aggregated tax base of 2.424 million HUF which is equivalent to a monthly salary of 202 THUF. Above this threshold, i.e., on the amount of income exceeding this amount, the gross-up system should be applied at a rate of 27%.

Social security contributions

According to the Proposal, the employee’s in-kind social security contribution will be raised by 1%, from 2% to 3%. According to the proposal, a new health care and labor market contribution base of 1.5 times the amount of the minimum wage will be introduced for employees having fulltime job.

Health Contribution

In the case of interest allowance, the base of the health care tax percentage would be the actual tax base, which is 1.19 times of the interest allowance.

Corporate Income TaxAs was previously published, the Proposal limits the possibilities of loss carry forwards, including:Losses carried forward can be used up to 50% of the calculated tax base without taking into account the losses.

Local Taxes

The most important change in the Proposal affecting local taxes is the expansion of the right of the local authority to determine the municipal taxes.

Value-added tax

Beginning January 1, 2012, the VAT rate will increase to 27% One significant change is that the VAT of services related to operation and maintenance costs can be deducted with a proportion of the business usage from January 1, 2012.

Customs

Since 2010 – because of the unified customer registry database – the customs authority also has access to data handled by the tax administration.

Excise Tax

Manufacturing of beer, wine, or champagne by natural persons, for private consumption does not qualify as domestic manufacturing of excise product, and therefore is exempt from the obligations that pertain to warehouse taxes.

Rules of Taxation

The regulations concerning conditional tax assessments will also change. The possibility for permanent conditional tax assessments will be introduced for excise taxes and corporate income taxes, and will stay in effect even if the pertaining tax regulations change.

Public health tax

The proposal contains new taxes levied on flavoured beer and alcoholic beverages. The rate of the tax will be 20 HUF per liter. Contrary to previous rumours, the tax will not be levied on coffee.

Accident Tax

A new tax, the so-called „accident tax” will be introduced, which will be collected by insurance companies. The taxpayer will be the operator of the vehicle; the tax base will be the yearly fee of the mandatory liability insurance, and the tax rate of 30%.

Duties

The Proposal standardizes the conditions for resorting to the 2% reduced duty rate available to real estate dealers and companies performing financial leases of real estate properties.

Company Car Tax

The Proposal also contains a raise on the company car tax rate, and its differentiation.

R&D Tax

According to the Proposal, the benefits decreasing the yearly gross amount of the R&D tax to be paid will be eliminated.