The corporate tax rate will be cut to a flat 9 percent next year, Prime Minister Viktor Orbán has told a conference. The rate would apply to big companies as well as small- and medium-sized enterprises. At present the rate is 10 percent on a tax base up to HUF 500 million and 19 percent over that. Orbán said the government decision was based on a proposal by the economy minister and decisions taken earlier on payroll taxes. He had asked National Economy Minister Mihály Varga to “do everything possible” to raise the minimum wage to a level that businesses can still bear. Varga said the new rate would save companies HUF 145 billion and be the most favourable in the European Union. He said the government wants to reach a prompt agreement with employer and employee representatives on its tax and minimum wage proposals for 2017 and 2018. If a deal were reached, the government could put a bill to Parliament quickly and the changes could enter into force on January 1. This would provide a solid foundation for the economic growth rate to rise from the current 2-3 percent to around 3-5 percent. Varga said the budget would not have to be amended, as the HUF 200 billion in reserves should be enough to accommodate the changes. Opposition party LMP contended that by lowering the corporate tax rate the government would turn Hungary into a “tax haven”. LMP said: “The government still doesn’t understand that the key to Hungary’s competitiveness does not lie in record low wages or taxes but in a highly trained and well-paid workforce.”
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