Reduce Corporation Tax to 9%

Today’s news is that corporation tax will be reduced to 9% from the previous 10 and 19%. The higher key applies to earnings above 500 million, affecting less than 1,300 companies in Hungary.

And these companies have either received heavy discounts so far or, on the contrary, have often paid more in sector specific taxes than corporation tax.

Just for example, they have now announced, with a big tweet, that VAT on the internet will be reduced to 18%. cable companies continue to pay extra tax on every meter of cable.

If it were removed, wired internet could be much cheaper than a couple of percent VAT reductions. But there are all kinds of bank taxes, telecommunications taxes and much more.

Life of the average company is that the corporate tax

In other words, what has really happened in the life of the average company is that the corporate tax has fallen from 10 to 9%.

Unfortunately, this is only a fraction of the corporate tax rate because there are many other addresses to be taxed at, including business tax, which for many companies is more than corporation tax, dividend tax and EHO, 27% VAT and company car – not to mention taxes and allies. (Excluding VAT and other taxes, an average small businessman was taxing roughly 30% on his income before pocketing the profits.

Now he is down to 29%. But if he sells to the public VAT, his tax burden is 51%, it is now reduced to 50%. No wonder you are dancing for joy because of the enormous ease.)

It is a spectacular but really insignificant tax cut, which can be well communicated that we have the lowest corporate tax rate in Europe (Bulgaria has led 10% so far). It has to be listened to in depth that only a fraction of the tax burden we pay is corporation tax itself, almost one of the most insignificant items, while many countries do not have to pay extra money for fifty items.

Companies may not be attracted to tax cuts

More importantly skilled labor and a predictable legal environment, but also the level of negotiable state support, though it may be good for multinationals to want to give away their income elsewhere. (This could even compensate for lost tax revenue, just think of the huge tax paid by GE at home.)

Anyway, tax cuts are still better than a tax increase, but this is not the kind of normalization and public finance we’ve been waiting for slowly for thirty years.

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