Prime Minister Viktor Orbán has announced that Hungary will lower its corporate profit tax rate to 9 percent, the lowest in Europe.
According to Reuters, Hungary is also planning further cuts in personal income tax rates, lower payroll taxes and reforms to higher education to boost competitiveness.
Speaking at the Regional Digital Summit in Budapest, the prime minister said a recent investment upgrade by Moody's was a sign that his policies, dubbed "Orbanomics," have successfully stabilized the economy. But, he said past success was no guarantee for the future.
"We cannot rest assured regarding the future of the Hungarian economy. The Hungarian economy needs comprehensive reforms to enhance competitiveness," the PM said during the conference organized by the European Bank for Reconstruction and Development.
In the World Economic Forum's 2015-2016 Global Competitiveness Report, Hungary ranked 63rd, behind Poland, the Czech Republic and Romania. It is also suffering a record labor shortage that is driving up wages across the economy.
The Prime Minister said that meant the period when Hungary could attract foreign investment with lower wage bills was ending, and that Hungarian companies would continue to face wage hike pressures.
Hungary's gross average wages rose by 6.9 percent in August at a time of no inflation.
The prime minister said personal income tax would probably be reduced from a current flat 15 percent rate. Payroll taxes would have to be lowered, he said, while the government will boost incentives for companies to invest in research and development.