On visiting the Budapest centre of the National Tax and Customs Administration (NAV), Minister for National Economy Mihály Varga said at a press conference that the general taxation overhaul has been finalized and now it was time for fine-tuning.

As the politician explained, he considers it crucial as new Minister for National Economy to get information on the work of background institutions. The reason for visiting first the national tax authority after assuming his post was that this institution, with more than 22 thousand employees, assures 92 percent of state revenues.

The Minister said he expects the NAV to work efficiently without needlessly disturbing honest taxpayers and to reach sectors which had so far avoided taxation. The Minister stressed he had requested the tax authority to act in a customer-friendly manner. Speaking about results, he underlined that last year NAV investigators uncovered 14 thousand cases of fraud, for which they deserve to be praised. The Minister said that thanks to more favourable tax rates, the black and grey economies, estimated at 20-30 percent of GDP, have shrunk. The recently implemented tax measures have also ensured the preservation of many jobs. As he stressed, every invoice protects an existing job and creates a new one.

Through the introduction of a flat-rate personal income tax system, several hundreds of billions of forints were left with households, which assisted people in increasing their savings or repaying their forex debts. Families have also received substantial support.

Responding to a question about a possible single-digit personal income tax rate, Mihály Varga said it was not planned yet; the flat-rate personal income tax system needs another half a year before it can be properly assessed.
With regard to the VAT on basic foods, the Minister said it must first be determined what kinds of foods it would be reasonable to introduce a preferential VAT rate for. On the other hand, in order to get the Excessive Deficit Procedure lifted, projected revenues and expenditures must meet the December estimates. Such measures will only be possible if the economic growth scenario is also successfully realized.
At its Wednesday session, Parliament will discuss the issue of connecting cash-registries to the NAV and how to compensate the purchase of new, system-compatible cash registries.

As the Minister of State said, his aim was to introduce a very simple system, and although the exact amount of compensation is still an open question, he wants a smooth transition to the new cash registries. It appears that the deadline of 31 May set for the transition can be met, and so he expects that the revenue target approved by Parliament will be achieved.
The Government will also debate what further measures it might introduce in view of the fact that the European Commission did not support the introduction of reverse-charge taxation regarding the sale of live pigs, half pig carcasses and forage.

Speaking about the situation in Cyprus, Mihály Varga stressed that the Hungarian Government has been taxing banks instead of account-holders. In his opinion, Hungarian account-holders would be best protected if they repatriated their holdings. The option to do this without having to pay a punitive tax had been available for a temporary period – he added.
NAV President Ildikó Vida called the national tax authority of Hungary the most optimally operating public institution. The positive results of having merged tax and customs authorities are becoming apparent; joint tax- and customs raids – often also involving criminal investigators – have been highly successful. Personnel and structural changes are not under consideration; in light of the tasks, the current institutional set-up appears optimal.
The Office aims to provide customer-friendly administration; its customer relations and service capacities will be improved. As an example of this, Ildikó Vida mentioned that several customer service centres are working with extended office hours, and tax and customs sections operate joint customer service centres. Supervision will also be improved, not only to secure revenues, but also in order to safeguard law-abiding taxpayers and avoid any possible competitive disadvantage.

(Ministry for National Economy)