Government eliminates loophole offered by small business tax

By changing the rules of the small business tax (KATA) the government has eliminated an opportunity for taxpayers to “bypass the original aim” of the KATA system, the head of the Prime Minister’s Office told a regular government press briefing on Wednesday.

Gergely Gulyás said that the KATA tax, introduced in 2012, was aimed at offering a flat tax to small local service providers. Ninety percent of the first 100,000 KATA taxpayers were such entrepreneurs, but now two-thirds of KATA payers receive income from companies rather than being employed, he insisted.

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Gulyás called it “unacceptable” that while people in the KATA system paid a flat tax of HUF 50,000 (EUR 122) a month, a hospital nurse had to pay a monthly HUF 184,000 (EUR 450.03) in taxes.

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Source: MTI