Minister Nagy explained Orbán’s announcements: details on VAT refunds and tax exemptions 🔄
Budapest, February 24, 2025 (MTI-ECONEWS) – National Economy Minister Marton Nagy said 2025 would be a “breakthrough year” at an awards ceremony organised by the Joint Venture Association in Budapest on Saturday evening. He explained Orban’s announcements in detail, here are the details on VAT refunds and tax exemptions:
As we wrote yesterday, PM Orbán announced unique tax exemptions, possible food price caps, and a Pride ban in the State of the Nation speech; details are HERE. After that Nagy said the outlook was supported by high employment, real wage growth, increasing consumption, a pickup in tourism, more home sales, growing construction sector orders, and higher car sales. He also pointed to steps to make cheaper credit available to SMEs and said the government was weighing raising the headcount threshold for eligibility for the Small Business Tax (KIVA).
Nagy said an earlier launched economic policy action plan that aimed to boost purchasing power, ensure affordable housing and scale up SMEs had been expanded with a scheme to support the construction of 100 new factories, tax cuts and measures to bring down inflation, especially food inflation. The automotive, pharmaceutical and food industries, along with other high value-added sectors, will benefit from the new factories scheme, while personal income tax for families raising children will be cut, he added.
From October 1, mothers of three children will be exempt from PIT, he said. The measure will benefit 250,000 women and cost the budget an annual HUF 170bn, he added. He noted that a PIT exemption for mothers of four was already in force, impacting 70,000 women and leaving them with an additional HUF 50bn a year. Nagy said mothers receiving CSED and GYED infant support would also be exempt from PIT. He added that the measure will benefit 30,000-40,000 women a year and cost the budget HUF 10bn.
Nagy said talks with retailers were ongoing to address food price inflation. If an agreement with supermarket chains on keeping prices can’t be reached, prices will be regulated, and margins will be capped, he added. From October 1, Nagy said pensioners would be eligible for VAT refunds on purchases of fruit, vegetables and dairy products up to a limit.
At the event, Dr. Ágnes Fábián, President of the JVSZ, proudly reported on the development of the Association’s “Companies for the Future Award ” initiative, which was launched four years ago by the JVSZ Board with the aim of creating a tradition to present companies that are future-oriented, future-building and exemplary programmes from which the Hungarian economic sector can build and develop. “It is a testament to the Association’s value-creating power that the prestige of our awards has grown over the years, and today we have more than 300 people celebrating the most outstanding companies and future-building programmes in the Hungarian economy.”
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Awards to exemplary large and medium-sized companies
For the main prizes, companies were ranked according to a set of criteria compiled by OPTEN, while the special prizes were open to entries. A highly prestigious jury of experts decided the order of the winners in each category. For the third year running, the Ministry of National Economy has supported the initiative, with Minister of National Economy Márton Nagy, as the event’s patron, presenting the prestigious awards to exemplary large and medium-sized companies that have a positive impact on our future.
Magyar Suzuki, KOMETA 99 and Novopayment were among the big companies acknowledged at the awards ceremony. Mid-sized companies recognised at the Companies for the Future Award ceremony were Billingo Technologies, Waberer Medical Center and GB Solutions.
Winners of the 2 categories of the main prizes:
Medium Enterprise category
- 1st place: Billingo Technologies Zrt.
- 2nd place: Wáberer Medical Center
- 3rd place: GB Solutions Zrt.
Large business category
- 1st place: Magyar Suzuki Zrt.
- 2nd place: KOMÉTA 99 Zrt.
- 3rd place: Novopayment Ltd.
Winners of the 5 special prize categories:
Best Talent Program supported by Henkel Hungary
- 1st place: Foxconn Group
- 2nd place: E.ON Hungária Group
- 3rd place: SkillX Technologies Zrt.
Best ESG Program supported by E.ON Hungária Group
- 1st place: SPAR Hungary
- 2nd place: Emerson I NI
- 3rd place: MBH Bank
Best Technology Investment supported by Foxconn Group
- 1st place: Schneider Electric Hungary
- 2nd place: MAM-Hungária Kft. and Com-Forth Kft.
- 3rd place: SkillX Technologies Zrt.
Best Next Generation Company with the support of MAM-Hungária Kft.
- 1st place: Király Sport Association (Király Sportegyesület)
- 2nd place: KITE Zrt.
- 3rd place: Robotizálunk Kft.
Innovation Hungarian! Special prize with the support of TV2 Media Group
- 1st place: Kuube Hungary Kft.
- 2nd place: Resysten Hungary Kft.
- 3rd place: PEAK
Read here more news about tax and VAT in Hungary
UPDATE
Ministry assures simple procedure for pensioners’ VAT rebates
Budapest, February 24, 2025 (MTI-ECONEWS) – The procedure for pensioners to claim rebates for VAT on staples such as fruit, vegetables and dairy products, will be “extraordinarily simple”, the National Economy Ministry said in a statement on Monday.
Days after the planned rebates were announced, the ministry dismissed comments on the measure by the National Association of Accountants, calling them “cheap political fear-mongering”. The ministry said pensioners would be issued with a card to avail of the rebates which they would get automatically along with their monthly pension payments.
The people of Hungary who need a VAT rebate and a tax reduction are the low income and retired people who continue to pay 27% of everything they spend to a government with no sense of where to apply their revenues for the betterment of Hungarian society.
The other day I entered a neighborhood food store (a Spar store, so I’m sure the current regime has an explanation that this kind of incident would only happen in a Spar store) and noticed an elderly lady entering the store in front of me. When I left the store she was again in front of me and was putting her basket away. She turned to me and said in Hungarian, “Minden olyan drága. nem tudok venni semmit.” She is in the same situation as young people working themselves into an early old age trying to make ends meet for their family.
Okay, so there are many factors driving inflation. I have my own ideas about that, but as far as food is concerned, a big one is the VAT. Basic food stuffs should be exempt from VAT…….not investor schemes. And, the amount of VAT paid needs to be shown on food store receipts just as it is on utility invoices.
An elderly person, especially one of Hungary’s widows, spends more of their meager income on food and utilities than anyone else in our country. They deserve a break from this tax, and so do younger Hungarians dealing with the stresses of providing for a family.
Oh, we need this tax to support government operations. Okay. Then government operations need to tighten their belt, not the little old lady at the Spar store.
Here is an “out of the box” idea, as Hungarians like to call them. What if the tax balance starts to increase to companies and decrease to employees? I mean 9 vs 27 percent is a big gap!
As I´ have pointed out, many times – Hungary has the world’s highest VAT rate, paid by the end users (“Hungarian citizens! Families!”), which makes possible the world’s third-lowest corporate tax rate. It is that simple.
https://taxfoundation.org/data/all/global/corporate-tax-rates-by-country-2024/
Here’s an even simpler idea. 0% VAT on foodstuffs for all Hungarians. The UK charges no VAT on food. Equally I’m sure that Hungary would be instantly bankrupt if it instituted this, as 27% VAT on food (not to mention the 4.5% tax on supermarkets) are major contributors to the national budget and the treasury would be bereft without the income from this unfair tax. Recently I found that the price of basic foodstuffs in Waitrose, the UK’s most luxurious supermarket were cheaper than the same items bought in Hungary.
Well, Jose. It’s a long story and I’m not an economist. But I can tell you what the record reflects about changes 2011 and 2017. At those times Hungary changed its graduated income tax for both individuals and corporate entities to a flat rate system. These changes dramatically reduced the taxes for both corporations and high income Hungarians. Prior to 2011, the individual income tax rate for the highest earners was 44%. It was reduced to a flat rate system of 16% and then to 15%. That’s a huge reduction. In 2017 the corporate income tax was reduced from a high of 19% to a flat rate of 9%. In 2012, the VAT was raised from 25% to 27%.
Make of this what you will. I have, and here’s a summary. “The rich get richer and the poor get poorer”.