On December 13, 2016 the Hungarian Government issued a press release announcing that on that same date the Hungarian Parliament adopted a package of payroll tax amendments designed to facilitate the realization of a six-year wage agreement signed by the Government and wage negotiation partners on November 24, 2016.

 

As we earlier reported under the wage deal, the Government undertakes to reduce the rate of corporate income tax to a flat rate of 9%. Currently the Hungarian corpoare income tax regime has a progressive rate under which annual turnover below HUF 500 million is taxed against 10% and under which annual turnover exceeding HUF 500 million is taxed against 19%.

 

According to the press release under the adopted taxpackage furthermore a.o. social contributions payable by employers will be reduced from 27% to 22% in 2017, and subsequently by another 2% points to 20% in 2018. It is furthermore stated that in addition, the Hungarian Government has committed itself to decrease payroll taxes by another 0.5% provided that gross wages will have risen at least 11% by 2017. Accordingly, the rate of employer contributions might even fall by 2018 from the current 27% to 19.5%.

 


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