On 15 June 2016 the Act LXVI of 2016 amending certain tax laws and related legislation and Act CXXII of 2010 on the National Tax and Customs Authority was published in issue no. 87 of Magyar Közlöny (the Official Gazette of Hungary). The most important provisions of the amending act are summarized below. In addition to next year’s tax changes, the amending act contains several provisions that will come into effect later this year. We point out these provisions in this newsletter.
Changes related to tax proceedings
Special taxpayer classifications
According to the amending act, from 1 July 2016, the total tax difference charged to taxpayers classified as “reliable” will have to be reduced by the total tax difference credited to these taxpayers during the current year and the preceding five years. Public limited liability companies can also be classified as reliable if they have been in operation for less than three years. The amendment provides that companies undergoing involuntary deregistration and taxpayers who have amassed unpaid default fines exceeding 70% of their tax payments also be slotted into the “risky” category.
From 1 January 2017, the tax authority will transfer VAT refunds to public limited liability companies within 30 days.
Tax audit of binding rulings
From 1 July 2016, a new type of tax audit will be introduced: binding rulings will be fact-checked to find out whether the events underlying a binding ruling actually occurred, and if so, whether the ruling in question is binding on the tax authority. During the audit, the tax authority may only request documents specifically mentioned in the binding ruling as records that, if issued, kept or retained, prove that the underlying events actually occurred. Regarding binding rulings becoming final and binding before 31 December 2015, the taxpayer may also initiate the proceedings.
Another change during the year is that the expert opinion of the Hungarian Chamber of Auditors must be attached to requests for a binding ruling pertaining to IFRS accounting.
Publication obligation under the block exemption regulation
From 1 July 2016, in accordance with Article 9 of Commission Regulation (EU) No 651/2014 (“block exemption regulation”), the Member States concerned must ensure the publication of relevant information on each individual aid award exceeding the HUF equivalent of EUR 500,000. According to the amendment, for aid in the form of a tax advantage, the required information on individual aid amounts in the specified ranges must be published within one year from the date the tax declaration is due, and must be available for at least 10 years from the date on which the aid was granted.
Self-revisions after the limitation period
According to the amending act, from 1 July 2016, taxpayers will be able to submit self-revisions even after the right of tax assessment has lapsed, in accordance with a court decision, in order to meet their tax obligations. Based on the self-revision, the tax authority may conduct an audit within one year. For periods already closed by an Audit, the related tax obligation may be corrected by means of a re-audit at the taxpayer’s request.