Hungary’s tax climate is unpredictable due to frequent changes to the tax code.
Uncertainty surrounding Hungary’s legal climate and the administrative burden and unpredictable outcome of tax audits pose serious challenges to doing business in Hungary according to Deloitte Zrt.
According to a survey of tax experts at nearly 1000 companies in 29 European countries the most important attributes of a favorable tax climate are simplicity, predictability, and cooperativeness on the part of the tax authorities. The survey concludes that Holland and the United Kingdom have the best tax climates and Russia and Italy the worst.
92 per cent of Hungarian respondents expressly criticized Hungary’s tax system as unpredictable mainly due to frequent changes to the tax code.
Whereas 75 per cent of European respondents said their companies had been audited in the past three years, in the case of Hungary it was 95 per cent, with Hungarian auditors paying special attention to areas of transfer pricing and international taxation in addition to VAT and corporate taxes.
Whereas 38 per cent of European respondents believed unfavorable audits could be successfully challenged in court, only 15 per cent of Hungarian respondents believed this to be the case.
83 per cent of Hungarian tax experts surveyed said stability was the key to competitiveness. They recommend a 1-2 per cent decrease in taxes on employers.
Over one quarter of Hungarian respondents said they would be willing to work with the tax authorities on developing a more predictable tax climate.
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