The Hungarian Government has been following a political and legislative agenda which aims at expanding employment, maintaining budget discipline at an economic level as well as equal burden-sharing within society.

The expansion of employment has been defined as a priority of the Government’s economic and development policy. To this end, a Job Protection Action Plan was launched last summer, incorporating a ten-point agenda to support the employment of those under the age of 25 or over the age of 55, the long-term unemployed, unskilled workers and mothers returning from maternity leave. Its measures include cutting social contribution tax and vocational training contributions for these prioritized groups as well as reducing the burdens of micro- and small enterprises and cutting their red tape. A sum of HUF 300bn has been secured for the programme, which does not affect the overall budget.

Employment has been on a growing path during the past two years. According to the Hungarian Central Statistical Office (KSH), in August-October 2012 the number of employed was 3 million 935 thousand, which is 71 thousand more than one year ago and a 160 thousand increase since 2010. The Job Protection Action Plan will certainly further improve domestic employment data.

The Government has also given significant support to investment projects which result in the creation of new jobs. It is necessary for 5.5 million people to hold a regular job and pay taxes in order to move forward on the path of economic growth. In 2012, long-term strategic partnership pacts have been concluded with several large firms which play an important role in the Hungarian economy. Agreements have so far been signed with the local subsidiaries of Coca-Cola, Alcoa-Köfém, Daimler, Suzuki, Hankook, General Electric, Microsoft, Stadler and Tesco, and with Hungarian pharmaceutical giant Gedeon Richter.

To ensure a business-friendly environment, in 2010 the Government reduced corporation tax from 19% to 10% as well as the administrative burdens of businesses, by some HUF 500 billion, and simplified the licensing procedures of projects and public procurements. The re-organisation of the vocational training system is also underway so that Hungary will be able to offer highly-trained experts to projects and businesses moving to the country.

As of 1 January 2013, the general minimum wage will also increase. The Cabinet has approved a proposed rise in the guaranteed minimum wage for unskilled workers to HUF 98 000 (EUR 346) per month from 93 000 and to 114 000 from 108 000 for skilled labour. According to trade unions, this will enhance the purchasing power of families by 2.2%. The decision was made following a meeting of a consultative body consisting of representatives of the Government, the National Association of Entrepreneurs and Employers (VOSZ) and the National Trade Unions' Association (MSZOSZ).

Last week, Parliament approved the introduction of two new tax forms which aim at simplifying the operation of small enterprises. The small taxpayers’ itemised tax is designed for enterprises with a yearly income of less than HUF 6 million. The tax payable is HUF 50 thousand per month for those employed full-time and HUF 25 thousand for those working part-time. The tax replaces the enterprise's corporate tax, as well as personal income tax and contributions and the social contribution tax payable on them for those registered as small taxpayers, and also healthcare and vocational training contributions, making it a simple, tax-saving method of tax for small enterprises. The tax base in the case of small enterprise tax, on the other hand, is determined as the sum of the company's cash income and personnel-related payments. Its rate is 16% of the tax base. It replaces several contributions such as the social contribution tax, the vocational training contribution and corporate tax. Head of the Federation of Hungarian Entrepreneurs and Employers (VOSZ) Ferenc Dávid stated that the introduction of the two new tax forms would be beneficial to businesses. According to the announcement made by the National Tax and Customs Office (NAV), 47 thousand and 5 thousand applications have been submitted so far with relation to small taxpayers' itemised tax and small enterprise tax, respectively.

(Prime Minister’s Office)