| Hungarian Taxation |
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| Tuesday,July 15,2008 Posted: 22:08 BJT(08 GMT) |
| From:驻匈经商处 Article type:Redistributed |
INTRODUCTION
Personal income tax and VAT were introduced into the Hungarian tax system in 1988. This was a first step in a long process of tax reform. The next major step, undertaken in 1991, was the modernization of the corporate income tax system. In 1993, the VAT legislation was further modified to conform, at least in principle, to the VAT systems used in the European Union. 1995 witnessed the introduction of a two-tier corporate tax system, comprised of a standard rate and a supplementary tax. New legislation, which came into force in 1997, left the standard rate untouched whilst replacing the supplementary tax with a withholding tax. With Hungary's accession into the European Union, several changes have been implemented in the Hungarian tax legislation during the past few years to comply with the EU tax directives (e.g. parent-subsidiary directive, mergers directive, and further harmonization with the sixth VAT directive).
The current, significant taxes and levies imposed in Hungary are:
§ Corporate Tax
§ Bank Tax
§ Personal Income Tax
§ Value Added Tax
§ Customs Duties
§ Excise Duties
§ Property Transfer Tax
§ Local Taxes
§ Social Security Contributions
§ Contribution to the Rehabilitation Fund
§ Contribution to the Vocational Training Fund
§ Contribution to the Cultural Fund
§ Death, Gift and Inheritance Taxes
§ Environmental Protection Charge
§ Innovation Contribution
§ Energy Tax
§ Registration Tax
§ Environmental Pollution Charge
TAX PROCEDURES
The Hungarian taxation system has developed in recent years is now close to the level of complexity found in Western Europe. Tax laws in Hungary are enacted by Parliament. The Tax Authority provides only interpretative and administrative guidelines for these laws. Court decisions currently play an increasing role in interpreting tax laws and, as a result of Hungary’s accession to the EU, European Court of Justice (ECJ) case law is also applicable.
Double taxation treaties override the local income tax legislation. See list at end of page.
Hungarian taxation operates under a self-assessment system. Taxpayers are required to register, determine their tax obligation, make advance payments, file tax returns on their own behalf , make corrections to the tax returns as needed, keep records and supply information as required by law. Authorities randomly examine tax returns to enforce the self-assessment system. The Head of the Tax Authority (APEH) determines the target areas to be audited in each tax year. The tax year is the calendar year for individuals and the calendar year or the business year for companies. In general, tax returns must be filed annually. However, for VAT, payroll and withholding taxes, quarterly or monthly filing may be required.
Act XCI of 1990, severally amended, provides for the order of taxation and, within this, the uniform regulation of the rights and duties of taxpayers and tax authorities.
In general, the Act addresses:
§ the principles of the order of taxation
§ the definition of the range of taxpayers
§ the rules of reporting individual tax liabilities
§ issues of data provision, data recording and the tax sector
§ the rules of scopes of authority, competence, audit and penalty related to taxation.
A five-year statute of limitations period applies to tax liabilities in Hungary from the end of the accounting period in which tax returns are required to be submitted. For example, the tax return for the year ending 31 December 2006 is required in 2007. The statute of limitations for the 2006 tax year expires on 31 December 2012.
For updates and downloadable forms see: http://en.apeh.hu/
For regular updates also see this page: www.hungarytrade.co.uk
For the details of hungarian taxation,please visit the website of ITDH:
http://www.itdh.com/engine.aspx?page=Itdh_Taxation#intro
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