The finance ministers of the European Union Member States support the request of the Hungarian Government relating to the tax reduction and simplification for small enterprises. According to this decision, the limit for VAT exemption for small enterprises might be increased to HUF 12 million. This legislative amendment would affect more than 600,000 taxpayers. If the Hungarian Parliament adopts this change, this amount will be equal to the income limit of the taxpayers falling under the scope of the Act on the Fixed-Rate Tax of Low Tax-Bracket, which is also HUF 12 million. Due to this change, the companies with a revenue up to HUF 1 million per month could also apply for this type of tax liability.
The increase of the limit of the revenue will also reduce the administration burden of taxpayers falling under the scope of the Act on the Fixed-Rate Tax of Low Tax-Bracket. It means in practice that these taxpayers need to complete a value added tax return only once a year. The change is based on the proposal of the biggest tax advisory companies.
By Eszter Kamocsay-Berta, Managing Partner, KCG Partners Law Firm