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Hungary's parliament has adopted a package of tax cuts designed to increase the country's economic competitiveness.
Included in the legislation is a proposal to introduce a flat rate of corporate tax of nine percent from 2017. Currently, companies in Hungary are subject to corporate tax at 19 percent on annual income in excess of HUF500m (USD1.7m) and 10 percent on income up to this threshold.
The tax cut bill will also lower employer social contributions from 27 percent to 22 percent in 2017, and to 20 percent in 2018. The Government also has committed to a further 0.5 percent reduction in social contributions if employers increase gross wages by at least 11 percent by 2017.
In addition, more businesses will be eligible to use the fixed rate tax regime for small companies. At present, small and medium-sized businesses with fewer than 25 employees can opt for a flat tax of HUF50,000 a month on revenues up to HUF6m, with revenues above this level taxed at 40 percent. Under the changes, the threshold for the flat tax regime will increase to HUF12m.
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