Government’s Tax Cut Program Point by Point

Many businesses can benefit from this support.

Tax cuts also support domestic businesses (Source: Shutterstock)

Through tax cuts, administrative simplifications, investment incentives, and targeted subsidies, the government is supporting Hungarian businesses. The 11 point tax cut program, worth 80 to 90 billion forints, provides meaningful assistance to a total of 230,000 to 240,000 businesses, the Ministry for National Economy announced.

Micro, small, and medium-sized enterprises form the backbone of Hungary's economy. Ninety nine percent of domestic companies belong to the SME sector, providing livelihoods for 72 percent of the workforce. Since 2010 the government has therefore consistently supported SMEs with measures to reduce tax burdens and red tape, as well as with targeted programs.

Business financing is supported by the fixed 3 percent SME loan introduced in October, as well as the second phase of the "1+1" SME investment stimulus program. In addition, the Demjan Sandor Program, launched last year, supports investments by domestic SMEs with more than 1,400 billion forints in funding, contributing to their increased productivity and growth.

Despite the headwinds caused by the war, the government, in cooperation with the Hungarian Chamber of Commerce and Industry, is taking further steps to reduce the burdens on businesses. The 11 point tax cut package is built on real entrepreneurial needs and brings favorable changes for all types of corporate structures.

Main elements of the 11 point tax cut program:

• The threshold for VAT exemption is increased.
• The expense ratio for sole proprietors is raised, reducing the tax base.
• The social contribution tax base multiplier is eliminated for full time sole proprietors.
• Eligibility for the small business tax (KIVA) is expanded.
• Tax incentives support environmental remediation and clean industry investments.
• Energy infrastructure investments receive targeted support.
• The bracket thresholds for retail tax are increased.
• The valorization of excise duty on fuels is postponed by six months.
• The threshold for the frequency of corporate tax advance payments is increased.
• Thresholds for simplified reporting by micro enterprises are raised.
• Three measures significantly reduce administrative burdens for sole proprietors.

"The government’s objective remains unchanged: to reduce the burdens on businesses, encourage investment, protect jobs, and strengthen the competitiveness of Hungarian SMEs. Hungary’s tax policy continues to place families, employees, and domestic businesses at its center. In contrast, the Tisza Party's austerity package aims to collect an additional 3,700 billion forints in taxes from Hungarian businesses. Such a brutal tax increase on enterprises would amount to a deliberate dismantling of Hungarian businesses and the economy," the ministry emphasized.