BUDAPEST: Hungary intends to reduce corporate tax rate to 9% by 2017, which would be the lowest level of the European Union. Currently the Hungarian companies with a turnover of under 500 million HUF (1.6 million EUR) pay 10% tax on profits, while the larger companies pay 19% corporate tax.
“Next year the corporate tax will be lowered to 9%, for small and medium-sized enterprises, as well as large corporations”, said the said Hungarian Prime Minister Viktor Orban. “With such taxes Hungary will offer the best fiscal policy within the European Union”, added he. The decision to reduce taxes is taken on Thursday, November 17, after consultation with the Minister of Economy of Hungary Mihaly Varga.
Until now, Bulgaria, Ireland and Cyprus had the lowest corporate tax in the EU. Varga said that Hungary’s 2017 budget is made so that it can assume an initial decline of 145 billion HUF, as a result of the reform of the tax system in terms of corporate taxation.
“This means that 145 billion HUF will remain in the coffers of corporations. Also is allocated a reserve fund of more than 200 billion HUF, which will be more than enough to cover fluctuations in the budget”, said the Hungarian Minister of Economy.
However the social security in Hungary is among the highest in the EU. The minimum wage in Hungary is 111,000 HUF, which is 360 EUR. Low wages in Hungary have forced many Hungarians to seek work abroad, leading to a critical level the number of staff in some sectors.
Meanwhile, Orban said he would go to increase the minimum wage to highest possible levels, but although not mention a specific figure.
