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Tax Audit Plan for 2021: E-commerce, Construction Sector, KATA Taxation and More in Focus

Tax Audit Plan for 2021: E-commerce, Construction Sector, KATA Taxation and More in Focus

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The Hungarian tax authority published its annual tax audit guidelines with the clear aim of supporting compliant taxpayers and take firm actions against intentional tax evasion by utilizing additional data sources in the process as well.

The tax audit plan sets out four main focus points. First is the sectors and activities with significant budgetary risks: e-commerce and trade of computer hardware remain hot topics and construction sector, tourism and hospitality, food industry and agricultural products, inter alia, are expected to be under scrutiny this year.

Secondly, extension of online invoice data disclosure obligation as of 1 January 2021 and former abolition of reporting thresholds enables full access to taxpayers’ invoice data and significantly enhances the potential of data analysis. The tax authority has an effective measure to identify and uncover (fraudulent) billing chains and to prevent the loss of budget revenues. A key opportunity and task is to utilize the data received in the framework of the international exchange of information on cross-border tax structures as of 1 July 2020. In addition, data from the “Employee Alert” system should be a useful asset in order to fight fraudulent employment, while bogus (self-) employment of KATA taxpayers will be closely monitored due to the changes applicable from 1 January 2021.

In addition, in order to secure budget revenues and due to their economic weight, auditing large taxpayers remains a key element of the Hungarian tax authority’s plan with additional emphasis on data gained from international exchange of information on cross-borders structures and transactions.

Finally, to support voluntary compliance by taxpayers, the tax authority intends to use so called supporting procedures (in the case of minor discrepancies) and compliance audits (for more significant discrepancies) without sanctions, at first.

By Balint Zsoldos, Head of Tax, KCG Partners Law Firm

Hungary Knowledge Partner

Nagy és Trócsányi was founded in 1991, turned into limited professional partnership (in Hungarian: ügyvédi iroda) in 1992, with the aim of offering sophisticated legal services. The firm continues to seek excellence in a comprehensive and modern practice, which spans international commercial and business law. 

The firm’s lawyers provide clients with advice and representation in an active, thoughtful and ethical manner, with a real understanding of clients‘ business needs and the markets in which they operate.

The firm is one of the largest home-grown independent law firms in Hungary. Currently Nagy és Trócsányi has 26 lawyers out of which there are 8 active partners. All partners are equity partners.

Nagy és Trócsányi is a legal entity and registered with the Budapest Bar Association. All lawyers of the Budapest office are either members of, or registered as clerks with, the Budapest Bar Association. Several of the firm’s lawyers are admitted attorneys or registered as legal consultants in New York.

The firm advises a broad range of clients, including numerous multinational corporations. 

Our activity focuses on the following practice areas: M&A, company law, litigation and dispute resolution, real estate law, banking and finance, project financing, insolvency and restructuring, venture capital investment, taxation, competition, utilities, energy, media and telecommunication.

Nagy és Trócsányi is the exclusive member firm in Hungary for Lex Mundi – the world’s leading network of independent law firms with in-depth experience in 100+countries worldwide.

The firm advises a broad range of clients, including numerous multinational corporations. Among our key clients are: OTP Bank, Sberbank, Erste Bank, Scania, KS ORKA, Mannvit, DAF Trucks, Booking.com, Museum of Fine Arts of Budapest, Hungarian Post Pte Ltd, Hiventures, Strabag, CPI Hungary, Givaudan, Marks & Spencer, CBA.

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