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Jan 03, 2020

Further tax cuts in store for Hungary

Norbert Izer said the economy’s growth was backed by tax cuts, adding that reductions may be continued as the central budget has “stable and predictable foundations”.

A finance ministry official has said Hungary's "strong economy, increasing employment and wages" ensure higher budget revenues, which, in return, offer opportunities for further tax cuts.

Norbert Izer, state secretary at the finance ministry, said the economy’s growth was backed by tax cuts, adding that reductions may be continued as the central budget has “stable and predictable foundations”.

According to MTI, social contributions paid by companies are set to be cut from 17.5 to 15.5 percent by October this year. The social contribution tax was reduced from 27 to 17.5 percent in July 2019.

Under a deal the government secured with employers and unions late in 2016 linking payroll tax cuts to wage rises, the payroll tax was reduced from 27 percent in 2016 to 22 percent in 2017 and 19.5 percent in 2018.

From 2019, payroll tax is to be reduced a further four times by two percentage points on each occasion as long as the gross average private sector wage rises at least 6 percent year-on-year in the first quarter of the given year.