Parliament passes taxpayer classification, red tape reduction laws, supermarket oversight fees and farmland leases

Budapest, November 17 (MTI) – Lawmakers on Tuesday approved bills on cutting red tape and classifying taxpayers based on tax compliance risk. Lawmakers approved an amendment to the Farmland Act on Tuesday that will allow the periodical review of leases by landowners. Also the lawmakers voted to reduce Hungary’s supermarket oversight fees to come into line with a European Commission recommendation which addressed complaints earlier.

Lawmakers approved the red tape reduction package which will amend a total of 110 laws with 148 votes in favour, 2 against and 37 abstentions. The bill was put forward by government office chief Janos Lazar and aims to simplify and speed up tasks in public administration, scale back the activities required for obtaining permits and reduce completion deadlines.

Under the amendments, activities no longer requiring permits will include the sale of precious metal jewelry, setting up animal shelters or hotel services. Regarding activities that will still require permits, the amendment stipulates that if the relevant authority fails to rule on an application within two months, the applicant will automatically be granted a permit. The law enters into effect on January 1, 2016.

Parliament also approved the taxpayer classification bill with 125 votes in favour, 3 against and 58 abstentions. To be classified as a “good” taxpayer, companies, having operated for at least three years, cannot have tax arrears of more than 500,000 forints (EUR 1,600) in the past five years. For such companies, tax audits will last a maximum of 180 days after April 1, 2016, and the deadline for VAT reimbursements will be reduced from the current 75 days to 45 days from January 1, 2017 and to 30 days from 2018.

Taxpayers categorised “at risk” will be those who violate tax laws and amass a significant amount of debt in unpaid taxes. Individuals who have over 10 million forints of outstanding tax will be classified as risky taxpayers, while this threshold will be 100 million forints for companies. Taxpayers in this category will be subject to stricter tax laws, tax audits for them will be extended by 60 days and they will have to pay higher default charges.

The classification system will apply to some 525,000 taxpayers.

Parliament also passed a law that will allow the tax office to prepare the tax returns of 1.5 million private taxpayers who only collect an income from their employer and are not entitled to a tax benefit. From 2017, the tax office will prepare the tax returns of all private taxpayers.