in the case of corporation tax:-
- if the company is subject to monthly payment, the deadline is the 20th day of each month;
- if the company is subject to quarterly payment, the deadline is the 20th day of the month following the quarter end;
- a "catch up" payment has to be made on 20 December so that the company has paid in at least 90% of its estimated tax liability for the subject year;
- the balance of any tax due is then settled in the following year no later than 31 May which is the final date for filing of the corporate tax return for the previous year;
- in the case of dividend withholding tax on dividends paid to foreign companies, the Hungarian company must pay this in by the 10th day of the month, following the month of withholding;
- in the case of personal income tax, the tax has to be paid in by the 5th day of the following month or the 12th day of the following month, depending on the exact nature of the income. In the case of salary/wages and tax withheld from dividends (20% or 27%) the due date is the 5th day of the following month.
2. An important change has been made with respect to self-revisions. From 1 January 1997, a self-revision can only be performed by a taxpayer if the taxpayer calculated its tax liability in a manner which violated the law or made a clerical error in the calculation of its tax liability. Consequently, a taxpayer cannot perform a self-revision on the basis that it neglected to utilise a particular provision of the law, e.g. a tax allowance or higher rate of depreciation for example. The self-revision fee has been increased to 50% of the late payment interest in relation to the initial self-revision and 75% of the late payment interest in relation to second and subsequent revisions of the same period.
3. An Assets Betterment Test has been introduced whereby the Tax Office will be able to issue an assessment to a taxpayer based on estimated income if the income declared by the taxpayer on the tax return does not match the taxpayer's lifestyle and ownership of assets.
4. Under 1996 rules, tax inspectors were authorised to investigate a specific tax or subsidy of a taxpayer. A new type of authorisation has been introduced which will enable tax inspectors to review any suspected violation of law and will allow the inspectors to perform specific audit procedures.
5. The law provides strict penalties for non-compliance with tax regulations and lists a number of cases where such penalties will apply. Private individuals may be fined up to HUF 100,000 and other taxpayers up to HUF 200,000. Other sanctions include a restriction on the right of an individual to hold a senior position in a company for three years if it can be proved that a tax shortfall of HUF 100 million or above was due to that person's negligence.
6. Based on new rules regarding the collection of taxes, a taxpayer can be refused a refund of a certain type of tax if the taxpayer has an outstanding tax, social security, customs duty or local tax liability.
7. The Tax Authority has delegated responsibility for certain types of taxpayers to specific branches, for example:
- Large corporate taxpayers will be treated as "special taxpayers" with a specific branch of the Budapest Tax Office responsible for their affairs;
- VAT refunds by foreigners, companies based in duty free zones, foreign organisations and expatriates will all be dealt with by the North Budapest branch of the Tax Office.
8. In certain cases, a taxpayer will be able to obtain information in relation to another taxpayer (e.g. name, address, location and tax number) where such information is necessary to determine the first taxpayer's correct tax liability.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
If you require any further information on Hungary, please call Peter Gerendasi at Price Waterhouse, Budapest: tel: ++ 36 1 269 6910 fax: ++ 36 1 269 6938
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