Matovič proposes to reduce corporate income tax to 19%
The Minister of Finance plans to cover the costs with, among other things, increased taxes for banks, oligopolies and monopolies or taxes on dividends.
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Corporate income tax could drop from 21% currently to 19%. Entrepreneurs should also have flexible depreciation for productive investments.
These are some of the proposals of the third part of the tax reform presented by the Minister of Finance Igor MatoviÄ.
It plans to cover the costs through increased taxes for banks, oligopolies and monopolies or taxes on dividends, among others.
Entrepreneurs could save 273 million euros per year once the income tax on legal entities – businesses – is reduced.
Investments in personal business
“We want to allow entrepreneurs to breathe easier so that they can invest the funds saved in their business,” said MatoviÄ, quoted by the TASR newswire.
As part of the proposed reform, he suggests setting up flexible real estate depreciation for productive investments. An entrepreneur who buys the means that help achieve higher production should have the freedom as to how quickly he amortizes the investment in costs. This should save entrepreneurs 200 million euros per year.
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MatoviÄ considers the above to be the most reasonable support for investments, as it is support for people who, during their commercial career, have demonstrated that they are capable of generating profits.
He also proposes to introduce what he calls group taxation.
“The owner of several companies can opt for group taxation, which will allow them to settle the profits and losses between their companies,” said MatoviÄ, quoted by TASR. This does not mean that companies should have only one accounting book.
This measure would result in a loss of 30 million euros per year for the state, estimate analysts from the Ministry of Finance.
How to pay for changes
MatoviÄ plans to finance the proposed measures by increasing the dividend tax. He is proposing to increase the tax from 7 to 9 percent now. The increase should bring 26 million euros to the state budget.
More funds are expected to come from electronic invoices, a planned system similar to the eKasa digital cash register system. The finance minister said that electronic invoices are helping to eliminate fraud in Hungary. This could bring in an additional 127 million euros.
MatoviÄ has also proposed to increase the taxes of banks, oligopolies and monopolies, from which he foresees a gain of 200 million euros.
Anti-fraud measures could bring in an additional 60 million euros. An additional 100 million euros could be collected through dynamic effects, as he believes that entrepreneurs would like to do more business after the implementation of such rules.
Not all of the changes within what MatoviÄ calls a tax revolution have been disclosed. He originally said he would present them in three days, but has now announced another press conference on Friday, November 19, to discuss changes in restaurant taxes and income tax for the self-employed.