Matovič proposes decreasing income tax for businesses to 19 percent

The finance minister plans to cover costs with, among other things, increased taxes for banks, oligopoly and monopolies or taxes from dividends.

Finance MinistryFinance Ministry (Source: TASR)

Income tax for legal entities could decrease from the current 21 to 19 percent. Entrepreneurs should also have flexible property write-offs for productive investment.

These are some of the proposals of the third part of the tax reform presented by Finance Minister Igor Matovič.

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He plans to cover the costs via increased taxes for banks, oligopoly and monopolies or taxes from dividends, among other things.

Entrepreneurs could save €273 million a year once income tax for legal entities - businesses - is decreased.

Investments into personal business

“We want to let entrepreneurs breathe easier so they can invest saved funds into their business,” Matovič said, as quoted by the TASR newswire.

Within the proposed reform, he suggests implementing flexible property write-offs for productive investments. An entrepreneur who purchases the means that help to attain higher production should have freedom regarding how fast he/she writes off the investment into costs. This should bring savings of €200 million per year to entrepreneurs.

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Matovič considers the aforementioned to be the most reasonable support for investments, because it is support for people who during their business careers demonstrated that they are able to turn a profit.

He also proposes introducing what he calls group taxing.

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“The owner of several companies can opt for group taxing, which will allow them to settle profits and losses between their companies,” Matovič said, as quoted by TASR. This does not mean that companies should have only one accounting book.

This measure would result in a loss of €30 million a year for the state, estimate Finance Ministry analysts.

How to pay for the changes

Matovič plans to find finance for the proposed measures in increased tax from dividends. He proposes raise the tax from the current 7 to 9 percent. The hike is estimated to bring €26 million to the state budget.

More finances should flow in from e-invoices, a planned system similar to the eKasa digital cash register system. The finance minister said e-invoices helped eliminate frauds in Hungary. This could bring in an additional €127 million.

Matovič also proposed increasing taxes for banks, oligopolies and monopolies, from which he projects a gain of €200 million.

Measures against fraud could bring in an additional €60 million. Another €100 million could be collected through dynamic effects, as he believes that entrepreneurs would like to do business more after the implementation of such rules.

The changes within what Matovič calls a tax revolution have not all been unveiled. He originally said that he would present them in three days, but has now announced another press conference, on Friday November 19, to talk about changes in taxes for restaurants and income tax for the self-employed.

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