Mária Lakatos

Taxation in General: Hungarian Tax System

The personal income tax system at present

One of the basic principles of the Hungarian taxation system is that the tax liabilities of the citizens can be defined solely and exclusively by acts, i.e., by statutory provisions adopted by and proclaimed in the Parliament, coming into force at the dates as defined in said acts. This is true not only for the taxes but for the contributions, too. (Well, this has been changed in the Summer of 2020, when the government has introduced so called rule by decree.)

Accordingly, Hungarian citizens and foreigners acquiring income in/from Hungary are subject to Act No. CVXII of 1995 (the Personal Income Tax) as amended [11]. The draft structure of the Act is as follows:

Basic principles,
Scope of the Act,
Terms and interpretative provisions,
Income, revenues, expenditure,
Calculation of the basis of assessment,
Items (benefits) reducing the basis of assessment,
Determining the tax payable for the consolidated basis of assessment,
Determining the tax advance, making the required tax returns for it and its payment,
Income taxed separately,
Taxation of self-employed,
Transfer of property,
Capital gains,
Benefits in kinds,
Special procedural rules,
Closing provisions.

We have already discussed the principles in the previous chapters. Somewhat simplified, the specific principles here are as follows:

as much as the circumstances allow attempts should be made for implementing the constitutional requirement of bearing the public burdens pro rata of income,
there is no tax-free income, i.e., any lowest limit under which no taxes are payable: whatever is the source of the income (title whereunder it is paid) tax is payable from the very first forint earned,
special preference is afforded under the Personal Income Tax Act to investments and savings; they are treated specially.

Accordingly, the Hungarian personal income tax has the following peculiarities:

it is personal,
general,
provides benefits through several channels,
relies on the principle of fairness and equity,
tax benefits can be granted only if the relevant contract realizes the objective of the regulation.

To continue with we shall discuss the fundamental structure of personal income tax. This structure is generally applicable and all tax acts are built up in similar fashion.

Taxation in General: Hungarian Tax System

Tartalomjegyzék

Kiadó: Akadémiai Kiadó

Online megjelenés éve: 2022

ISBN: 978 963 664 137 5

Taxation is a scheme for the state to provide revenue. The so collected money could then cover the public spending of the government. These are the so-called allocative and redistributive functions of the state budget. Although, taxation theory discusses the various tax types and analyses the various taxation tools very extensively, there is no absolute answer to the question, when and what type of taxation system would be optimal. Thus this introductory book on taxation deals with the three basic types of taxes - the income tax, the VAT and the corporation tax - in a very pragmatic way. There are legal texts and cases from both the international and also from the relevant Hungarian practice.

This book is recommended not only for students of economics but also for law students and practitioners beside anyone who is interested in the basic regulations of taxation.

Hivatkozás: https://mersz.hu/lakatos-taxation-in-general-hungarian-tax-system//

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