This dispatch will outline the main provisions of draft acts No. T/10314 and T/10315, which were submitted by the government on 28 April 2020.

Retail tax

• Based on the draft act No. T/10315, the Government initiates to levy a retail tax, which was originally introduced on a temporary basis via Governmental Decree 109/2020. (IV. 14.) (“Decree”), permanently.
• The main provisions presented in the draft act, such as taxable persons, taxable activities, tax base and tax rates, reflect the rules as already set out in the Decree.
• The draft act stipulates somewhat distinct procedural rules, also in consideration of the retail tax already introduced by the Decree. Per the general rules, tax advances would be payable in two equal instalments, by the 20^th day of the seventh and 10th months of the tax year. As for tax year 2020, special provisions would apply:
  • The first advance would be due by the 20^th day of the second month following when the act becomes effective;
  • The second advance would be due by the 20^th day of the fourth month following when the act becomes effective.
• For taxpayers who have already completed their advance declaration in line with the Decree, advances for the above deadline would be calculated on the basis thereof; additional advance reporting would not be required.
• Moreover, in terms of tax year 2020, if the date of the second advance occurred after the balance sheet date, the total advance would be due in a lump sum by the date of the first advance. Also, if both the first and second advances occurred after the balance sheet date, the tax advance would be payable by the last day of the tax year.
• The annual tax return would be due by the last day of the fifth month following the year-end. In terms of tax year 2020, annual tax would be calculated on the basis of the total taxable income realized in the tax year, pro-rata according to the number of days falling within the effective date of the act and the balance sheet date.

Surtax on credit institutions

• The provisions of Governmental Decree 108/2020. (IV. 14.) would be transposed without modification to the new act, supplemented by a provision allowing credit institutions to deduct 20% of the amount of their exceptional tax burden from their usual bank tax in equal instalments over the five tax years from 2021 onwards.

Corporate income tax

• According to the draft act, the tax base decreasing item in relation to the development reserve would be capped at the amount of the total pre-tax profit for the tax year – instead of the previous 50% limit– but would still not be allowed to exceed HUF 10 billion per tax year.
• A transitional provision would declare that the above-mentioned favourable rule could already be applied to the 2019 tax year, upon the taxpayer's choice, as follows:
  • If the taxpayer has already filed a corporate income tax return for 2019 before the effective date of the new act and has an approved annual report as well, then the taxpayer can self-revise the tax return no later than 30 September 2020, by creating a fixed reserve at the same time in accordance with the revision rules of accounting for the 2019 tax year.
  • The above accounting treatment is still available if the taxpayer has not yet filed a corporate income tax return for 2019, but has an approved annual report: in this case, there is no need for a self-revision.