Page 12 - bne_Tech_06_2020

Fintech & E-commerce
June 2020 www.intellinews.com I Page 12
Hungary moves to online invoicing to combat shadow economy
Hungary will extend online invoicing to all companies as of July 1, local media wrote on June 5. Since last July invoices with the VAT amount
of HUF100,000 (€290) had to be submitted to
the National Tax and Customs Administration (NAV) electronically. From next month this will be extended to all invoices even those without VAT content.
There is a three-month grace period, but companies nevertheless must register to the online system by July 1. The third phase will come next year when NAV will have an overview of all invoices issued to Hungarian or foreign individuals.
Measures to reduce the size of the shadow economy have produced significant benefits. The value-added tax gap (the revenue loss relative
to the total VAT liability) is estimated to have decreased from 21% in 2013 to around 9% in 2018.
The government has introduced a number of other measures besides online invoicing to combat the black and grey economy. Retailers were required to install online connection to the tax office from September 2014 and now a broad range of services are also compelled to use online cash registers.
An electronic system for tracking the transport of goods (Ekaer) inside Hungary and on public roads between member states was introduced in 2015.
Companies are obliged to provide the tax authority with detailed information for VAT purposes on certain business-owned transport that use public roads.
The government has also promoted the spread
of electronic payments through the payment terminal installation programme. The launch of the instant payment scheme from March is aimed at reducing the amount of cash in circulation, which remains one of the highest in Europe.
Hungary has attracted investors by reducing
its corporate tax rate to 9%, the lowest in Europe, and steps had been taken to reduce the complexity of the tax system. The government plans to reduce the number of taxes from 60 in 2019 to below 40 by the end of 2020.
Parliament approved a string of tax-related legislation last week. The flat tax for small businesses (KIVA) will be cut from 12% to 11% from July 1. The tax merges four different social security contributions paid by employees into a unified contribution. Still, a number of special sectoral taxes persist, even though their weight in total tax revenues has been decreasing over the past years.
The new law raises the exemption rate from the corporate tax for reinvested profit from 50% to 100% for a period of four years but keeps the cap on the exemption unchanged at HUF10bn.