ACT XIII OF 2022 ON LOW TAX-BRACKET ENTERPRISES AND ON SMALL BUSINESS TAX (KATA) HAS BEEN PUBLISHED

As we previously reported on July 12, 2022 the Hungarian Parliament adopted Act XIII of 2022 on Fixed-Rate Tax of Low Tax-Bracket Enterprises and on Small Business Tax (hereinafter: ”KATA Act”). Details of the Kata Act were published in the Official Hungarian Gazette on July 18, 2022, and are as follows:

1. Only full-time entrepreneurs are allowed to select the KATA Act taxation system and must submit the relevant form on their KATA tax status to the National Tax and Customs Administration (Hungarian abbreviation: NAV) on or before September 25, 2022.

2. The tax liability is HUF 50,000 per month, which must be paid by the 12th day of each month.

3. The annual revenue threshold is HUF 18 million, the tax payable exceeding this amount is 40 percent, which must be declared and paid for tax year 2022 by February 25, 2023.

4. Eligibility for taxation under Section 5 of the KATA Act will be terminated if the small tax business enterprise generates revenues from legal person payers (including foreign legal persons) with the exception of taxi drivers.

Note that individuals who previously held second jobs and reported taxes under the KATA Act, will no longer be permitted to do so.