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Proposal Aiming for Special Industrial Zones

Proposal Aiming for Special Industrial Zones

Hungary
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The Hungarian Parliament accepted a bill on 16 June 2020, which would enable the creation of special industrial zones. “The designated special industrial zones will be contributing to the restarting of the economy, creation of new jobs, and also the preservation of the existing jobs” stands in the press release. According to the legislation, the main goal of the regulation is to facilitate a fairer distribution of tax income realized from greater investments as these zones would be no longer under the control of the local council.

Special industrial zones would be territories, where special regulations would apply to the investments planned. These territories would be defined by a Government decree if the volume of the contemplated investment would reach up to HUF 5 billion (~ EUR 14.5 million), which would be of economical importance for the whole municipality and would prevent significant loss of jobs or facilitate the creation of new ones. 

If a special industry zone is set up, the county representative council would exercise the duties and powers of the local council in the given territory. This means that the county representative council would have the right to levy local taxes and to decide upon their distribution. Budapest, as capital would be exempted from the abovementioned rules. 

Many mayors have expressed their dismay in connection with the proposed legislation, as they argue that many local municipalities would be deprived of legitimate tax income, thus their day-to-day operation could be in danger in the future.

By Gabriella Galik, Partner, KCG Partners Law Firm

KCG Partners at a Glance

KCG Partners is a Hungarian business law firm providing a comprehensive range of legal services to international and local clients seeking local knowledge and global perspective. The firm comprises business-minded lawyers with sector-specific expertise, creating value for clients by applying a problem-solving approach and delivering innovative solutions.

The firm has a wealth of knowledge in corporate law, M&A, projects and construction, energy, real estate, tax, employment, litigation, privacy and forensics, securitization, estate planning and capital markets.

To address clients’ regional and international concerns, the firm maintains active working relationships with other outstanding independent law firms in Central and Eastern Europe, whilst senior counsel Mr. Blaise Pásztory brings over 40 years’ of US capital market and fund management experience.

KCG Partners Law Firm is the result of the teamwork of passionate and talented lawyers guided by the same principles and sharing the same values: 

  • Our most valuable asset is our people. They are the engine of our business and the key to our success.
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Firm's website: http://www.kcgpartners.com