Amendments in Corporate Income Tax Act and Advertisement Tax Act from 2017

December 14, 2016

As of 2017 significant changes will be implemented in the Corporate Income Tax Act. These modifications and in addition, those important changes that came into force during 2016 newsletter are as follows:

  • new definition of royalty had been implemented and the rules of the tax base modifying items had been modified (July 2016);
  • transactions with the main purpose of gaining tax advantage will be sanctioned by the Act;
  • new tax base modifying item in relation to shares in start-ups, renovation and operation of historical buildings;
  • new tax incentive for investments aimed at energy-efficiency;
  • lighter requirements for headcount- and wage increase in case of development tax incentive and extended application period;
  • new rules for the support provided free of charge;
  • according to the plans the corporate income tax rate will be decreased to a single 9% rate.

Furthermore, there will be minor changes in the Advertisement Tax Act from 2017:

  • clarified definition of the publisher for online advertisements;
  • no obligation to determine the advertisement tax base consolidated with the data of the related companies.

We note that the European Commission further analysed the Hungarian Advertisement Tax and concluded that it still breaches the state-aid regulations, therefore further proceedings are expected.

Furthermore, we note that the T/13159 Proposal is aimed to amend other taxes as follows:

  • the rate of the health contribution and the social contribution will be decreased to 22% as of 1st January 2017 and as of 1st January 2018 to 20%;
  • the personal income tax rules of the sales of real estates and related rights will be modified;
  • the entrepreneurial personal income tax will be decreased to 9%;
  • the “KIVA” rate will be decreased to 14% as of 1st January 2017 and as of 1st January 2018 to 13%;
  • Building tax liability will be introduced to advertising surfaces.

If you are interested in the above topic please contact our experts at Ecovis Tax Solution who would be entirely at your disposal to assist you.