Finance Minister Mihaly Varga – Photo: MTI

Varga: Hungarian tax system to remain competitive despite global minimum tax

The government aims to preserve the competitiveness of its tax system, notwithstanding implementation of the global minimum tax, Mihaly Varga, the finance minister, told the heads of large Hungarian companies.

At the meeting, Varga discussed Hungary’s implementation of the EU directive on the global minimum tax (GMT), and noted that Hungarian companies paid one of the lowest public taxes in Europe.

Hungary must incorporate the GMT into its legal system by January 1, 2024, the ministry said in a statement.

Hungary took an active role in fine-tuning the rules, he said, and succeeded in ensuring that investments benefit from a tax break and that a broad range of taxes paid in Hungary should be taken into account, he said.

When transposing the directive, the government aimed to ensure that any additional tax deducted should remain in Hungary and red tape on businesses should increase as little as possible, he added.

Also, the government is shaping global minimum tax regulation so that Hungary can carry on offering an attractive investment environment for businesses, and that income generated in Hungary is taxed exclusively in Hungary.

GMT liability applies when the income tax rate of a multinational company in a state effectively is below 15 percent, affecting companies with consolidated income of 750 million euros in at least two of the previous four years.

After consulting companies and receiving their proposals, the ministry will submit detailed rules for implementing the EU directive on GMT to parliament, to coincide with the submission of autumn tax laws, the statement said.

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