According to the analysis of the Ministry for National Economy, it is not in the interest of Hungary to join the Competitiveness Pact as Hungary is already taking all the necessary steps outlined in the EU’s structural pact. Furthermore, the Széll Kálmán Plan contains even more ambitious measures while sustaining the independence of the tax system.

The Hungarian Government and the Ministry for National Economy unanimously agrees on all the objectives of the Competitiveness Pact of the European Union.  Enhancing competitiveness, increasing employment, correcting sustainable government spending and sustaining  financial stability are all in the interest of Hungary, as well.  However, the crucial point in the Competitiveness Pact is the harmonization in the standards of corporate tax.

At the same time, Hungary has successfully had its vision prevailed according to which the members of the European Union could join the Pact voluntarily. It also means that if a country decides not to join the Competitiveness Pact for the time being, it can do it any time in the future, as well.

The Széll Kálmán Plan that was introduced in March contains all the steps that guarantee the financial and economic stability of the country. However, the harmonization of the corporate tax system is not in the interest of Hungary as the economic policy aims at attracting more investors to the country.  In order to reach this objective, the currently high tax burden needs to be curtailed. Hungary has taken the first step by introducing the simplest personal income tax system, abolishing ten “small-scale” taxes and moderating the corporate tax to 10% up to HUF 500 million. These decisions were only the commencement of the measures that Hungary needs to take in order to increase competitiveness. Accordingly, in the forthcoming years Hungary is planning to strengthen its position in the tax competition.

Therefore, according to the analysis of the Ministry for National Economy, it is not in the interest of Hungary to join the Competitiveness Pact as it is already taking all the necessary steps outlined in the EU’s structural pact. Furthermore, the Széll Kálmán Plan contains even more ambitious measures, while it sustains the independence of the tax system.

(Ministry for National Economy)