Hungarian Corporate Tax Rate to be Lowered to 9% in 2017

Publicated on: November 18, 2016

At the Regional Digital Conference in Budapest on Thursday, November 17, Prime Minister Viktor Orbán announced that corporation tax will be lowered to single digits next year: a rate of 9% will apply equally to small and medium-sized enterprises and large corporations. He added that this was decided at the Cabinet meeting on Wednesday, after a proposal from the Minister for National Economy, and earlier consultations with employers. Mr. Orbán said that, with regard to increasing the minimum wage in Hungary, he had asked the Minister for National Economy to do as much as possible in seeking to raise it to as high a level as businesses can reasonably sustain.

Prime Minister Viktor Orbán asked the European Commission not to seek to keep VAT on digital services high due to some logic of equalization, but to allow countries to lower the rate if their “budgets can withstand this”, and where it makes sense in terms of industrial policy. At the conference Mr. Orbán added that he will ask the European Commissioner for Digital Economy and Society Günther Oettinger – who was in attendance – to advocate categorizing digital services as “basic needs”, similar to milk and bread. The Prime Minister also said that there are plans for VAT on internet services to be reduced from 27% to 18% in Hungary next year, and the Government would like to further lower it to 5% in 2018. At present, however, the European Commission does not permit such action.

(Cabinet Office of the Prime Minister/MTI)