On April 22, 2020, a government decree came into force which granted entrepreneurs a deferral until September 30 to submit their financial statements and tax returns. A number of other minor relieves have been introduced.
Concerning any corporate tax, small business tax (KIVA), local business tax, income tax of energy suppliers and innovation contribution that becomes due by 30 September, it is sufficient to file the tax return and pay the tax until 30 September. In other words, taxpayers whose financial year corresponds to the calendar year (for whom the deadline for filing the tax return would be on 31 May) were granted a 4-months’ deferral but taxpayers whose business year ends on March 31 (i.e. whose tax return shall be filed by August 31) will have only one extra month.
During the deferral, tax advances must continue to be paid, but in the absence of an annual return, on the basis of the obligation set out in the last available tax return, observing the same schedule. However, the taxpayer may request a reduction of the amount to be paid in this way before the advance payment is due, if it is expected that the tax for the tax year starting in 2020 does not reach the sum of the tax advance.
May is the year-closing period for most companies, and this would imply a gathering to approve the annual report, which could be hampered by the coronavirus epidemic. Here you can read about a government decree introducing more flexible rules for holding company meetings. However, according to another regulation, it is not necessary to gather only for the adoption of the annual report, because taxpayers have been given a deferral until September 30 to prepare and publish the report.
The upper limit of the amounts that can be given to the SZÉP Card as a fringe benefit has been raised for 2020: up to HUF 400,000 for the accommodation sub-account, up to HUF 265,000 for the hospitality sub-account, and up to HUF 135,000 for the leisure sub-account. Until 30 June 2020, the benefits transferred to the card will not be subject to social contribution tax, but only to 15% personal income tax.
It was introduced a few years ago that the tax authority could classify taxpayers as ‘reliable’ or ‘risky’, giving the former a number of benefits and the latter a number of disadvantages with the rating. However, due to COVID-19, even the position of reliable taxpayers may be aggravated through no fault of their own, so the government decree states that this positive rating cannot be revoked due to a breach of tax liability during the state of danger and within 30 days thereafter, or if (i) proceedings are initiated against the taxpayer, (ii) a tax debt exceeding HUF 500,000 arises or (iii) its tax performance turns negative. In the case of a classification performed following the 11 March 2020, any tax difference established at the expense of the taxpayer due to the breach of tax liability due during the above-mentioned period shall be disregarded.
Firms in difficulty will also have the opportunity to apply for a deferral of payment, instalment payment or tax reduction until the 30th day after the end of the state of danger. There is no fee for such application and the tax authority will decide on the applications within 15 days. The tax authority may grant a deferral of up to 6 months or a payment of 12 months in instalments in respect of a tax debt of up to HUF 5 million. In the application it shall be explained how the payment difficulty can be traced back to COVID-19. A tax reduction can be requested on the grounds that the payment of the tax would make the applicant’s economic activity impossible for a reason attributable to coronavirus. The tax authority may reduce the tax by a maximum of 20%, but not more than HUF 5 million. A taxpayer can only receive a reduction once and for only one type of tax. Deferred payment, instalment payment and tax reduction are mutually exclusive options.
Taxpayers using the EKAER system are exempted from providing risk deposit until the 30th day after the end of the state of danger, already paid risk deposits will be immediately refunded by the tax authority. A small but detailed rule of defence is that it is sufficient for the operator to carry out the due inspection of cash registers and food vending machines within 120 days after the end of the state of danger.