On 31 October 2023, the Hungarian Ministry of Finance presented the draft legislation to the parliament regarding the implementation of EU Directive 2022/2523 on the global minimum tax.
As previously reported, the Ministry of Finance released the draft legislation for public consultation on 18 October 2023.
The draft legislation includes:
- An Income Inclusion Rule (IIR) and a Qualified Domestic Minimum Top-up Tax (QDMTT) will be introduced from 1 January 2024;
- An Undertaxed Profits Rule (UTPR) will be effective from 1 January 2025;
- A transitional Country-by-Country Reporting (CBcR) Safe Harbor and QDMTT Safe Harbor will be introduced;
- Covered taxes will include corporate income tax, local business tax, innovation contribution, and energy suppliers’ tax;
- A Substance-Based Income Exclusion will be implemented;
- A deferred taxation/tax accounting concept will go into effect for Pillar Two purposes;
- A new refundable R&D tax credit incentive will be introduced.
Hungary has decided to maintain its holding regime with a total exemption for dividends and capital gains until 24 February 2024. Furthermore, there will be no domestic withholding taxes and corporate payments from Hungarian entities to foreign companies.
