Hungarian PM Pledges Corporate Tax Reform

by Ulrika Lomas, Tax-News.com, Brussels

17 February 2005

Hungarian Prime Minister Ferenc Gyurcsany has made corporate taxation reform a government priority ahead of the national elections in 2006, it has been reported.

Whilst Gyurcsany has shied away from making any specific tax pledges, it is thought that the Prime Minister is likely to push for reform in the areas of corporate tax, VAT and personal income tax, in an attempt to make Hungary more competitive compared to neighbouring countries such as Slovakia and the Czech Republic, which have both cut taxes in recent years.

However, Gyurcsany told parliament earlier this week that the government should seek to act on tax reform either this year or early next year.

Taxation has become a key battleground in the run-up to the 2006 election, and opposition party Fidesz has already sought to outdo the ruling Socialists on the issue, by drawing up a package of tax cuts which it plans to introduce into parliament today.

According to Reuters, among the party’s proposals are a 5% cut in social security contributions to 24%, and an 8% cut in corporate tax cut for firms with annual revenue of less than 100 million forints (US$535,000) to 8%.

Fidesz is also calling for the local business tax to be fully deductible from the corporate tax base.

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