There have been several modifications in the Act on Rules of Taxation effective from 1st January 2016. The main changes are the following:
NEW! - Qualification of the taxpayers
One of the most important changes is the qualification process. A taxpayer registered in the register of companies or registered for VAT purposes shall be qualified by the state tax and customs authority as:
- reliable taxpayer
- „normal” taxpayer
- unreliable taxpayer
The objective of adopting the qualification system is to motivate the taxpayers who comply with the legislations. Consequently, the reliable taxpayer will trigger favorable treatment, while the unreliable taxpayer will trigger a stricter treatment.
What are the benefits of being reliable taxpayer?
- decreased upper limit applied in case of default penalty and tax penalty
- the duration of tax audits may not exceed 180 days
- if a reliable taxpayer has any debt between 10 000 HUF and 500 000 HUF owed to the authority, the settlement can be made in 12 installments without extra charges once a year
- the authority shall execute the payment of value added tax refund to reliable taxpayers within 45 days from 1st January 2017, and within 30 days from 1st January 2018 against the general deadline that is 75 days.
What are the disadvantages of being unreliable taxpayer?
- increased minimum rate applied in case of default penalty and tax penalty
- the time limit for the payment of value added tax refund to unreliable taxpayers shall be 75 days
- if a taxpayer is considered unreliable during any period audited by the state tax and customs authority, or during the audit or any part thereof, the time limit for such audit shall be extended by 60 days
How often will the taxpayers be listed?
The qualification procedure will be carried out for the first time by 30 April 2016. Taxpayers will be rated quarterly, relying on data available on the last day of the quarter, within 30 days after the end of the quarter. The authority notifies the taxpayer concerning the outcome of the classification process electronically. If the taxpayer’s status changes, the authority sends a notice about it. The taxpayer can verify his status through the central electronic services network from the second half of 2016.
Changes related to tax audits
During a liquidation process, solely unreliable taxpayers will be subject to an obligatory tax audit. It will make easier for reliable taxpayers to close the business.
The duration of subsequent verification of tax returns may not exceed 180 days in the case of taxpayers whose registration is not mandatory. It shall not apply if the taxpayer fails to cooperate.
The authority shall request the person transporting goods of commercial nature to prove of the origin and ownership of the goods. If no infringement is found, the authority shall not draw up a report on the inspection, except if one is requested by the person transporting the goods.
Default penalty
In the event of non-compliance with the obligation of notification, declaration and data disclosure, or if it is executed with deficiencies, the authority calls the taxpayer whose registration is not mandatory to perform the obligation without imposing any default penalty. Default penalty is imposed only in the event of non-compliance. This can be applied with the exception of obligation of notification, employee notification and the obligation related to EKAER.
Integration of tax and customs account
The consolidation of tax accounts held at the state tax authority and the customs authority allows checking the liabilities or claims in one place.
Other modifications
From 1st January 2016 in connection with family tax allowance, the employers and payers are obliged to provide tax ID code or natural identification data for each dependent, the manner in which the allowance is claimed and the tax ID code of the spouse.
The limit will be increased from the current 150 000 to 200 000 HUF in case of payments by instalments without any late payment interest. Furthermore, this amount will be available referring not only to personal income tax but to health care contribution as well.
A private individual has the option to comply with the obligation of tax declaration by means of a declaration statement submitted to the employer in which he requests the state tax authority to establish his tax. The declaration statement shall be submitted by 31 January of the following year.
The state tax authority shall assess the taxes by 20 May of the year following the tax year based on the employer’s tax returns. The tax authority does not inform the private individual when taxes are assessed, except if there is a tax shortfall. In this case the tax authority adopts a resolution.