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