A Package of Proposals to Amend the Tax Laws in 2021 Has Arrived

Please note that this summary is about the draft, the adopted law might be different, so it is worth monitoring the amendments.

Personal income tax – PIT:

The system of taking advantage of personal allowances will be transformed. The personal allowance for specific defined illnesses can be claimed from the tax base from 2021 onwards, modelled on the family tax allowance.

Corporate income tax – CIT:

The Ministry of Finance has proposed the abolition of the HUF 10 billion ceiling of the development reserve.

Small business tax – SBT:

The value limit of choosing SBT will be raised to HUF 3 billion, and at the same time the limit for the cessation of this tax liability will be raised to HUF 6 billion.

Value added tax – VAT:

The proposal focuses on the eÁFA (e-VAT), the VAT return prepared by the tax authority. However, the preparation of the Vat return by the tax authority differs from the already known eSZJA (e-PIT), i.e. the personal income tax return prepared by the tax authority. According to the draft, taxpayers will have to decide on the deductible tax per invoice, and the draft will only be considered to be a return after active participation. In eSZJA we have become accustomed to the fact that passive participation can also result in a return.

The planned changes to the rules on e-commerce in the VAT Act, which must also be made in order to harmonize with Community rules, will apply from 1 July 2021:

  • Changes in the rules on intra-Community distance selling,
  • abolition of the import VAT exemption limit on low value consignments,
  • making electronic platforms for electronic commerce taxable,
  • and imposing the obligation to provide records and adapting the one-stop shop scheme to meet the new types of tax obligations.

Next year, an ex post tax base adjustment for bad debts can also be applied to customers who are not subject to VAT.

Business tax – BT:

Construction activities lasting less than 180 days will no longer be subject to temporary business tax next year. This can indeed be a significant administrative reduction for construction companies and will also mean a significant loss of revenue for local governments.

From 2021, businesses with more than one location will not have to file a separate return for each local government, it will be enough to file one return to the National Tax and Customs Administration of Hungary.

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