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Hungary Urged To Review Tax On Banks, Labor

by Lorys Charalambous, Tax-News.com, Cyprus

04 July 2014


The European Commission (EC) has advised Hungary to amend its corporate tax system, and to reduce the tax burden on banks and the tax wedge on low-income earners.

The comments follow the fifth EC mission to Hungary following the expiration of the EU financial assistance program in November 2010. In particular, the delegation highlighted controversial sector-specific taxes, which it described as distortive.

On banks, the EC said that sustainable growth requires the restoration of normal lending, and that banks' operating environment therefore needs to be improved. Reducing the tax wedge on low-income earners, meanwhile, would help to increase employment, it said.

The EC also called for Hungary to accelerate the clean-up of banks' asset portfolios, to address the issue of foreign currency mortgage loans through consultation, and to improve the business environment by stabilizing regulation and removing entry barriers to the service sector. However, the body said that it agreed with Hungarian authorities that 2014 and 2015 deficit targets are in reach, although Government debt is not yet on a firm downward path.

TAGS: tax | economics | European Commission | Hungary | corporation tax | tax rates | tax reform | individual income tax | Europe

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