Hungarian Parliament has approved the government’s tax package that cuts the corporate tax rate. Following the announcement of Prime Minister Viktor Orbán two weeks ago, the Parliament voted on the measure with 131 MPs in favour, 38 against and 25 abstentions.
The corporate tax rate will be cut to a flat 9 percent next year and will apply to big companies as well as small- and medium-sized enterprises. Currently, the rate is 10 percent on a tax base up to HUF 500 million and 19 percent on above.
The decision has followed as the Prime Minister asked National Economy Minister Mihály Varga to “do everything possible” to raise the minimum wage to a level that businesses can still. Varga informed that the government wants to reach a prompt agreement with employer and employee representatives on its tax and minimum wage proposals for 2017 and 2018.
Although the measures aim to boost country's competitiveness, some economists argued that the measures would result in little change as tax rates for large foreign multinationals in Hungary are already heavily reduced by Government subsidies and small firms already benefit from a lower-band 10 per cent tax rate on profits. Therefore, the measure would benefit primarily midsized Hungarian and foreign-owned companies with more than €2m in revenue, The Financial Times concluded.
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