The Government of Hungary recently submitted to the Parliament certain proposals concerning amendments to the tax law which will become effective from 2016. However certain changes regarding corporate income tax would take effect as from 2015.

The Bill regarding the proposed changes is expected to be passed in late June 2015. The proposed Bill does not contain any changes to the Hungarian corporate income tax regime. The standard corporate income tax rate of 19% will remain the same and there will be no change relating to base erosion and profit shifting (BEPS) related restrictive measures or anti-hybrid rules.

According to the proposed Bill the personal income tax would decrease from 16 percent to 15 percent as from 1 January 2016. Also the bill contains certain amendments to the current regulation related to various tax allowances. The Bill proposes to increase the tax allowance for individuals raising two dependents. It has also been proposed to increase the monthly health care contribution from HUF 6,930 to HUF 7,050.

For corporate taxation purposes a new tax relief would be introduced from 2016. Taxpayers whose pre-tax profit is five times the pre-tax profit in the preceding year may choose to pay taxes due on the part of their profit that exceeds the pre-tax profit of the preceding year over the next two fiscal years. This relief is available for tax year 2015.

Concerning fines and other related legal penalties, it has been proposed that if fines or other legal obligations are reimbursed to the taxpayer for subsequently established illegality, the amount of the increasing item charged for in the tax year or earlier reduces the pre-tax profit.

Under a transitional rule, the taxpayer would be able to apply this provision when assessing the tax liabilities for the tax year 2015.