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Corporate tax – tax credit for growth in Hungary | News Flash

17 Aug 2015

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HU-2015-08-14-Corporate-Tax-Tax-Credit-for-Growth-EN

Unlike previous years’ practice, new rules regarding next year’s tax changes were made surprisingly early in 2015. Law changes this year will not be that dominant although it is important to pay attention to possible law amendments that will be announced until the end of the year, as further clarifications are always to be expected. We will summarize the most relevant changes that could affect our partners’ economical activities. Further tax amendments will be published in our upcoming newsletters – the current newsletter will deal with the corporate tax change only.

Tax credit for growth

Legislators have implemented tax credit for growth allowance in accordance with the Corporate Tax Act. The new provision’s structure requires that tax/tax advance payable should be paid within the next two tax years by the amount of the pre-tax profit in the current tax year that exceeds the pre-tax profit in the previous tax year.

Required conditions

This will not provide tax advantage for the companies included in this scheme, however it will improve the liquidity of businesses as it forces the tax liability to be paid later. Tax credit for growth comes with certain conditions to be met, which are as follows:

    • Company has taxable status since 3 tax years
    • Company has not been transformed in the last 3 tax years
    • The pre-tax profit’s yield is equal or greater than five times the previous year’s pre-tax profit

Benefits of the rule

Dynamically improving businesses that gain profit fast, will benefit the most from tax credit for growth. Please note, that tax credit for growth can be used already after the current tax year’s profit even though it is only in next year’s proposed amendments. Tax liability to be paid can be delayed not only when the tax payment itself is due, but when advance tax payments are due as well.

Businesses utilizing tax credit for growth also enjoy further allowance – they do not have to deal with tax credit for growth’s not yet due amount of tax payable if they realize tangible asset investment and increase the headcount in their own business within 2 tax years of utilizing the benefits of tax credit growth.

Should you have any questions regarding the new amendment for tax credit for growth, please do not hesitate to contact us – our team of experts is always at your service.

If you need more information about the recent change please do not hesitate to contact us!

Contact:

István Nemecz

Managing Director

istvan.nemecz@accace.com

+36 14123535


Other similar articles:
  • Changes in the Rules of Invoicing Continuous Transactions’ VAT in Hungary | News Flash
  • Tax Changes in Hungary, 2015 | News Flash

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Originally established in Central and Eastern Europe in 2006, Accace ranks among the leading outsourcing and consultancy providers in the region. Engaging over 600 experts, we have vast experience with handling small to large scale, multi-country outsourcing projects and providing a comprehensive range of our services to over 2,000 customers.

About Accace Circle

Accace operates internationally as Accace Circle, a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated customer experience. Covering almost 40 jurisdictions with over 2,000 professionals, we support more than 10,000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and process at least 170,000 pay slips globally.

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