On 17 December 2020, the Parliament approved the COVID-19 Tax Measures Act. Recently, the Ministry of Finance has announced the draft winter package on tax measures for the coronavirus outbreak. The package includes the measures to introduce the interest deduction restriction measures of the EU Anti-Tax Avoidance Directive (ATAD), extension the validity of 5% VAT reduction for particular sector, Extension of existing tax payment deferrals, extension of Covid-19 tax measures, and flat-rate bad debt allowances.

Restriction on interest deduction

According to the winter package, the standard 30% of EBITDA limitation with a EUR 3 million safe harbor and more than interest expense or unused interest capacity allowed to be carried forward up to five years. The rules will apply for the financial years starting after 31 December 2020. For stand-alone entities and for group entities in where an entity’s equity ratio is lower than the group’s equity ratio will be exempted from this limitation.

Deferment in existing tax payment

Under the package, the existing tax payments are to be extended from 15 January 2021 to 31 March 2021. Also, during the period, no interest charges on deferred payments or late payment fines are imposed.

VAT

Due to COVID-19 pandemic, the 5% VAT reduction in the areas of hospitality, the hotel industry and the cultural sector will be extended until the end of 2021.