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Hungary’s tax system is progressing towards greater competitiveness, with further reductions in the tax burden planned for 2025, Finance Minister Mihály Varga stated at the National Tax and Customs Administration (NAV) conference in Budapest.
The politician emphasized, “strengthening competitiveness is the most important topic of Hungary’s EU presidency, and the tax system plays a crucial role in this.”
Since the introduction of tax-cutting policies in 2010, the country has significantly reduced its tax deduction rate and achieved one of the EU’s most notable efforts in “whitening” the economy. Minister Varga highlighted that improved tax collection efficiency has allowed sustainable reductions, such as lowering VAT (Value Added Tax) rates to 4.4% by 2021, nearly 18 percentage points less than in 2010.
Furthermore, simplifying the tax system remains a priority, with the number of tax bands decreasing from 64 in 2010, to 54 in 2025, with potential for further reductions.
Taxes on labor have seen substantial cuts, halving during the 2010s, with the focus shifting toward consumption taxes. For single earners, the tax rate on average incomes dropped from 53% to 41%, the largest reduction in the EU. Additionally, Hungary maintains a 9% corporate tax rate, the most favorable in the EU. The Finance Minister noted, “taxes on labor were practically halved, and this has supported businesses and employees alike.”
The country’s tax system is a cornerstone of its economic strategy, with Mihály Varga emphasizing the need to balance tax cuts with fiscal responsibility, stating that “the budget balance must be preserved, but the efficient work of the tax office opens the way for further reductions.” This alignment of competitiveness with fiscal stability underscores Hungary’s ongoing commitment to maintaining one of the EU’s most competitive tax systems.
Via MTI; Featured Image: Pixabay