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Apr 25, 2016

Further VAT rate cuts will make a big difference to Hungarians

The Hungarian Government aims to reduce the top line VAT rate as well as personal income tax and tax on staple goods.

Hungary’s ministry of national economy has highlighted plans to reduce the top line VAT rate to 25 percent or lower, according to business pbulication Figyelo.

During the recent interview, Minister Mihaly Varga said that Hungary’s government aims to reduce the 27 percent general value-added tax in the long term.

“It would be nice if the VAT rate could be reduced and the top rate brought to 25 percent or lower. This is in line with the cabinet’s long-term intentions, but now is not the time for this. There is opportunity for targeted steps,” he said.

Hungary’s government recently announced plans to reduce VAT on milk, eggs and poultry to 5 percent, while the rate on catering and internet services were cut to 18 percent.

Plans to reduce personal income tax to single digits by 2020, from the current 15 percent are also in the pipeline. However, Minister Varga noted that every percentage point reduced in the PIT rate results in a 120 billion HUF fall in budget revenue.

“We decided that it was more important now to ease the public burden with regard to staples. Not only in the interest of consumers but because we can support the sector’s producers, too,” Varga concluded.