Taxation of Multic: This is how the Hungarian government will deceive Brussels

Hungary previously “fought” so that as many taxes as possible could be added to the universal minimum tax. In addition to TAO, it includes business tax, innovation contribution, Robin Hood tax and additional profit taxes. If they are set up, the additional tax will only be payable if the overall expected minimum tax rate of 15 per cent is not reached. The details are not yet known and are expected to be regulated in the autumn tax package, until then there will be uncertainty – read the Niveus advisory group’s report.

The Global Minimum Tax is an international tax reform initiative initiated by the OECD, which was finally adopted by Hungary in December 2022. The goal of the reform is to require multinational companies with annual sales revenue of at least 750 million euros at company group level to pay at least 15% tax in each country in which they operate. If the corporate profit tax does not reach this 15% level in the country where a given company is taxed, the difference must be taxed in the country of the parent company, but the country of the subsidiary may decide to collect this difference. Additional line format. This prevents a company from setting up a subsidiary in a country with more favorable taxation for tax optimization purposes. In principle, Hungary is such a country; Since corporate tax is only 9 percent.

“However, the situation is not so simple – the report quotes Lajos Bakti, a partner of Niveus, companies pay several types of taxes on their camel business in Hungary. Typical examples are the local business tax, the innovation contribution, but also known in some sectors as the Robin Hood tax, officially the income tax on energy suppliers, and additional profit taxes. Hungary has consistently agreed that these taxes should also be included in the universal minimum tax – that is, corporate tax, local business tax, Robin Hood tax and additional profit taxes and other exempt taxes should only be paid if there are additional taxes. The expected minimum tax rate did not reach 15 percent.

For many companies, this causes uncertainty as to whether or not these types of taxes will be added, but according to Lajos Bagdi, we have to wait; The introduction of universal minimum tax rules, which will see the government impose a 15 per cent surcharge, will appear in the tax package due in late October and early November. In Budget 2024, corporate tax revenue is expected to be Rs 1,153 billion, which is almost 15 percent higher than last year.

There is no trace of detail in the current tax package, and as they know at Nivius, the Prime Minister is currently drafting detailed rules, many of which are still unclear. The tax application is pending from 2024 onwards.

Serious billions of euros could depend on it

As our newspaper recently wrote: Orbán’s cabinet promised the European Commission that, as a condition for withdrawing support resources of around HUF 6,200 billion from the Recovery and Resilience Facility (RRF), it would gradually reduce additional profits. Primarily taxes imposed by foreign corporations. Based on the decision of the Council of the European Union, Hungary should decide on the introduction of the following temporary tax measures in the fourth quarter of 2023:

  • Additional Profit Tax on Financial Institutions,
  • Additional profit tax levied on insurance companies,
  • Additional Profit Tax on Energy Companies,
  • Special Tax on Retail Sector,
  • Additional profit tax on telecom sector,
  • Special tax on pharmaceutical manufacturers.

However, due to the tight budget situation, the government does not want to introduce these types of taxes next year, so it is for this reason that it is trying to include them in the expected minimum tax.

Source link

Leave a Comment