Finance Minister Varga flags continued tax relief

Finance Minister Mihály Varga said tax relief was set to continue next year at a conference organised by the National Tax and Customs Authority (NAV) on Tuesday.

Varga talks about tax relief

Varga said Hungary’s tax system was “moving in the right direction” and was among the most competitive in the world. He added that the tax system was an important part of competitiveness, the focus of Hungary’s presidency of the Council of the European Union.

The government’s policy of cutting taxes, declared in 2010, has significantly reduced the tax burden, while Hungary has undertaken one of the biggest crackdowns on tax evasion in the EU, he said. Hungary’s VAT gap has been reduced by 18 percentage points from 2010 to 4.4pc in 2021, he added.

The number of taxes in Hungary has been cut from 64 to 54, and that number is set to fall further, he said. The rate of tax deductions, as a percentage of GDP, has declined from around 40pc in 2009 to under 35pc, he added.

Varga said the government had practically halved the tax on labour in the 2010s, while putting the stress on consumption-type taxes. The tax wedge for the average single worker has been reduced from 53pc to 41pc, the steepest decline in the EU, he added.

Hungary’s corporate tax rate, at 9pc, is the lowest in the EU, he said.

Touching on tax changes for 2025, he said the 5pc preferential VAT rate on homes would be extended for another two years, while tax allowances for families with children would double. Sectoral taxes on pharmaceutical companies, telecommunications companies and airlines will be phased out, he added.

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