The Parliament passed amendments to the tax law designed to recover from the economic crisis caused by the coronavirus epidemic without 120 gen, 60 sexes and abstentions. A novelty compared to the text originally tabled is that the single proposal put to the final vote, as a result of an amendment by Katalin Novák, allowed mothers with four children to benefit from the hereditary PIT exemption even if one of the children concerned could be entitled to it. for which the head of the residential social institution caring for him is entitled to receive the subsequent family allowance.
Also a change for individuals is that income from the sale of electricity obtained through non-self-employed activities is tax-exempt by the government up to 12,000 kilowatts per year if it is earned by the individual as an active user or member of the energy community. The amendment also sets out who and what proof must be issued in order for those concerned to benefit from this reduction, as well as how the amount received in return for electricity sold in excess of this quantity is to be declared and then taxed.
As we have explained in more detail here and here earlier, these make life easier for individuals, the more they are for employers, businesses and newly established public trusts. Among other things, a decrease of about 1.5 percent after merging the social contribution tax and the vocational training contribution. However, there is no indication in the single proposal that the government wanted to fulfill, with a last-minute amendment, its social contribution tax reduction commitment in the expiring multi-year wage agreement, linked to the fulfillment of real wage growth.
As a result of the addition tabled during the parliamentary debate and voted by the Legislative Committee, the proposal will provide even better conditions for supporters of higher education institutions organized in public trusts or maintained by the church than the originally very favorable 50 per cent. If they have a certificate issued by the relevant foundation or institution for the purpose of determining the tax base, the relevant enterprise may reduce the pre-tax profit of the undertaking concerned before the assessment of corporate tax by up to 300 percent of its cost as compensation for the subsidy, benefit or service provided. In the explanatory memorandum to the amendment, the rapporteur stated that, together with the other benefits in question, this reduction could continue to be applied up to the amount of the pre-tax profit.
Also an ex-post amendment, not yet in the original proposal, is the facilitation to exempt corporate taxpayers from non-governmental organizations, higher education institutions, public trusts, non-compliance with a permanent donation contract, higher education grant agreement or deletion of the beneficiaries concerned from the public benefit database, possible negative consequences of its termination without a successor. If there is a change on the part of the beneficiary, the rule still in force would increase the pre-tax profit of the donor company in a given year and, as the corporate tax base increases, the amount of tax payable. And if, for any other reason, the taxpayer does not make the donation made in the contract, the pre-tax profit of the company would double as a reduction in the tax base. However, this rule would be abandoned by the single proposal now tabled, ie
companies could be exempted from the legal consequences if they are suspended for any reason
the support of the given non-governmental organization, higher education institution, the National Cultural Fund, the Hungarian Damage Rescue Fund or a public interest asset management foundation.
The proposal to amend the Uniform Tax Act submitted for final vote also ensures that a non-profit company, social cooperative or school cooperative with membership in a group corporate tax entity does not lose its membership in a given tax year due to the establishment of public trusts, but until the end of a given tax year.
It is also new that the legislator lays down transitional rules for student contracts already concluded before the entry into force of the new Vocational Training Act and still living after its entry into force for calculating the tax benefits available to employers, given that the vocational training contribution can be deducted next year.
The new tax rules, like many other laws, come into force over a fairly wide time horizon. A very significant part of the changes will enter into force on the day following their publication, but, for example, new legislation in line with EU customs rules will apply from the 8th day after publication. It will have points effective from July 1, August 1, 2021, and October 1, 2021, respectively. In addition, there will be points that will only apply from January 2022 and July 2022, but there will also be points that will apply from 13 February 2023 and 1 January 2024, respectively.
They decided on the room for maneuver for next year
The fate of the central budget for 2022 was also decided at the sitting of the parliament on Tuesday: the parliament approved the summary amendment proposal of the Committee on Budgets with 121 yes and 60 no votes. By rejecting essentially all opposition amendments, the governing parties voted to allow the central subsystem of public finances to spend HUF 28,546.5 billion next year instead of the HUF 28,505.2 billion originally planned. In contrast, the initial revenue appropriation was set at HUF 25,393.8 billion from HUF 25,352.6 billion. The deficit is planned at HUF 3,152.7 billion.
They also changed the expected level of public debt: while Minister of Finance Mihály Varga spoke in the video posted on Facebook on 4 May when the budget bill was submitted that it is planned to reduce it to 79.3 percent of GDP next year, in the single amendment proposal before the final vote , 9 percent were marked as achievable goals.
In connection with next year’s budget, the government emphasized that, in addition to supporting investments and job creation, it would also cover family benefits, rebuild the 13-month pension and provide PIT-free for those under 25 years of age.
The amendment raises the provision in the chapter of the Ministry of Finance from HUF 93 billion to HUF 105 billion. From this, the additional resources necessary for the salary development of the model-changing higher education institutions (HUF 8 billion) will be provided, as well as the increase of the foreign exchange salary base of diplomats, the housing and mixed reimbursement fund. The foreign currency salary base, which has remained unchanged since 2017, will increase from HUF 425 thousand to HUF 440 thousand, while the housing and mixed cost reimbursement will increase from HUF 300 thousand to HUF 325 thousand.
MTI highlighted in relation to next year’s budget that
one of the biggest winners of the changes is tourism.
According to the explanatory memorandum, this is an important sector for economic relaunch, for which additional resources are needed to strengthen. The tourism development target in the economic restart fund will increase from HUF 40 billion to HUF 81 billion.
The summary amendment proposal provides a significant amount for the proposal of Gergely Gulyás, Minister in charge of the Prime Minister’s Office, to support the new programs of the Hungarian Academy of Sciences and the development of electronic services. The additional support of about 7.3 billion forints can be used to finance the academy’s alumni program, scientific counseling, institutional development of dissemination to society, and national programs in the fields of the Hungarian language, brain research and sustainable development. It also ensures the implementation of standard academic tasks for the scientific community, the continuation and strengthening of successful, previously launched programs – János Bolyai Research Fellowship, Young Researchers Fellowship, Visiting Research Fellowship, Momentum Program, Subject Pedagogy Program, as well as salary increases in public institutions. The increase will be covered by other budget expenditure.
Government agencies will receive significant support, plus HUF 10 billion, to renew their infrastructural background and finance new investments.
HUF 985 million was withdrawn from the operating budget of the courts and the Curia because “it is not necessary to cover the tasks that do not have an adopted legal background”.
Given their key role, family and youth organizations can spend HUF 850 million, or HUF 2.8 billion, to support their programs next year. The parliament voted an additional HUF 800 million to expand the Stipendium Peregrinum scholarship program for young people preparing for the most prestigious universities in the world and then utilizing their knowledge in Hungary.
The summary amendment provides additional resources for ethnic self-governments in a number of areas. Among others, there will be two hundred million forints more for ethnic scholarships for national teachers, but next year national ethnic self-governments will receive more funds, amounting to over one billion forints, to operate and support the institutions they maintain.
There will also be money next year, HUF 5.5 billion for the complete renovation of the facade of the Kútvölgy clinical block belonging to St. John’s Hospital, and the Hungarian State Opera House can receive HUF 388 million in support for the acquisition of equipment related to the investments.
The Károly Eszterházy University of Eger, which will join the Catholic Church, will be provided with additional support of HUF 1.9 billion in connection with the change of maintainer.
The Prime Minister’s Office may spend HUF 370 million, HUF 3.1 billion more than the originally planned HUF 2.7 billion, on the support of non-profit, social, non-governmental organizations and public bodies.
(Cover image: Members will vote at the plenary session of the Parliament on February 15, 2021. Photo: Zsolt Szigetváry / MTI)