Briefing notesBusiness infrastructure

Ministry of Finance to simplify local business tax

The continuous reduction of the tax administration burden has made a significant contribution to the economic results of recent years.

Mihály Varga, Minister of Finance, has stressed that local business tax relief should focus primarily on increasing investment, research and development, and reducing regional disparities.

The minister said steps to transform the local business tax could boost growth if it reduces the tax burden on businesses and help support R&D.

Minister Varga said one of the changes could see the abolition of the local business tax replenishment obligation in December, which tends to cause difficulties for businesses due to liquidity management and administration. 

The National Competitiveness Council proposes the termination of the obligation to pay the last month of the tax year from 2021, which may, among other things, facilitate the use of available resources for investment or wage development.

Minister Varga said it has also been suggested that depreciation should be deducted from the tax base. Around 850,000 businesses would be affected by this measure, which could effectively help expand investment and strengthen their productivity.

The council also discussed allowing businesses to deduct five times their R&D expenditure from the tax base, which could be an effective incentive to deepen the innovation mindset and have a positive impact on corporate productivity. After preparation and consultation, the proposals could soon be submitted to the government for approval.

Meanwhile, Dale A. Martin, President and CEO of Siemens Zrt., stressed that companies should place much more emphasis on innovation, environmental protection, dual training, digital skills of the workforce, and strengthening the relationship between trade policy and diplomacy in the future.

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