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Aug 24, 2020

Hungary regains its financial sovereignty

Hungary has regained its financial sovereignty over the past ten years thanks in large part to the elimination of the black economy.

 

Hungary has regained its financial sovereignty over the past ten years thanks in large part to the elimination of the black economy.

Finance Ministry State Secretary András Tállai told Magyar Nemzet that since the summer of 2018, businesses have sent information on some 80 million invoices to tax authority NAV via the online invoice system. Tállai added that this has allowed the authority to be able to map out virtually a complete picture of the state of the Hungarian economy.

According to MTI, almost 900,000 businesses have joined the online invoice system and the development of the system reached a new stage this summer. The state secretary said that up until now, transactions with VAT of over HUF 100,000 (EUR 285) were the ones that had to be reported to NAV, but since July 1, all transactions have to be reported. Tállai added that NAV will not penalise non-compliance until the end of September.

The state secretary said it was the novel coronavirus epidemic that had indicated that black economy activities were down significantly compared with 2010, adding that according to estimates, the government lost out on a quarter of its total potential VAT revenues during the 2008-2009 financial crisis because of the black economy.

Tállai said the damage done to the economy by the epidemic was no less serious than the impact of the 2008 crisis. “The difference is that Hungary’s economy is stable now, a large share of its creditors are households and the state has a source of revenue even in a time of crisis,” he said.

Photo credit: Portfolio