According to the announcement of the state secretary for tax matters issued in February 2019, the Hungarian Ministry of Finance is planning to introduce a new system that prevents multinational companies to avoid tax burdens in Hungary.
Due to the reform of the Hungarian tax system in 2011, Hungary has become one of the best investment locations in the European Union. One of the most important elements of this reform is the 9% corporate income tax, that is currently the lowest in the European Union. In 2018 98 large investment projects were realised through the investment promotion system, that created over 17,000 new jobs and the total value of these investment exceeds HUF 1380 billion. However, according to the state secretary, the beneficial corporate taxation should not result in tax evasion of multinational companies.
The European Union regulations will serve as benchmarks and models for the creation of the new anti-tax evasion system. According to the state secretary, the Ministry of Finance organised a tax conciliation forum in March 2019, where 23 professionals are invited in order to consult the details of the new system. The Ministry of Finance expects that the new system will be able to prevent the tax evasion of the multinational companies carrying out economic activities in Hungary.
By Eszter Kamocsay-Berta, Managing Partner, KCG Partners Law Firm