Considering the low
direct tax rates similarly on corporations (9%) such as on private persons (15%),
the reducing social security charges (19.5%) and the ceasing sectoral taxes; Hungary
has a more and more attractive tax environment, even in a wide international
comparison. At the same time, Hungary is continue to play increasing attention
to compliance and introducing new and new actions – mainly administrative
measures – against tax evasion. This, especially during implementation,
undeniably triggers significant costs and administrative burden for the
stakeholders. The new era of digitalization; however, gives the role for
control solutions that will finally reduce manual administration and
“competitive advantage” of tax fraud too.
Stability and fair
competitive market are surely among the most important factors for good-faith
businesses when deciding about their location for investments and long-term
operation. Germany is the most significant investor (almost 30% of the entire
FDI) and the most important foreign trade partner (about 28% of export) for
Hungary. More than six thousand German companies operate in Hungary, employing
a total of over 300,000 people, according to a survey by the German-Hungarian
Chamber of Industry and Commerce (DUIHK). Therefore, German companies’ level of
satisfaction and their willingness to invest in Hungary had always been very
important to the Hungarian economy.
The online cash
registers (2013), the Electronic Public
Road Trade Control System (“EKAER”, 2015) and from now on the online
invoice data reporting (July 2018) are 21-century solutions providing maximum
control mechanisms for the Hungarian Tax Authority. Their role in the struggle
against black economy, for the reduction of VAT GAP is unimpeachable. Although
Hungary proves to be a pioneer in such digital tax control solutions, this fits
to the mainstream world tendency supported by OECD and EU. Considering their
efficiency, the spread of such solutions is highly expected in surrounding
economies soon. In harmony of the important
goals, the failures lead to serious penalties: 40% of the product value for
failures in EKAER, 500 thousand HUF per invoices in the online invoice data
reporting.
The fact; however,
that such digital tax control systems give immediate insight for the tax
authorities into the business transactions requires a change of attitude in business
administration: as failures can be visible for the authorities immediately, the
internal processes should be developed to ensure correct handling even before
the reporting itself. The time for instant tax audit from the distance has
already started. Our business information is analysed by risk assessment
software supported by the artificial intelligence tools. Being aware of this,
the importance of internal control mechanisms, health checks and system
analyses significantly increases. Do not hesitate to ask professional support
from renowned advisors in reviewing and improving your corporate processes in
the field of taxation.
Keeping in mind the
above, nowadays everyone focuses on the implementation of online invoice data
reporting in Hungary. Although much software – especially the big international
ones – still requires development for meeting the requirements; their defaults
generate need for actions in the business too; for example in consideration of
self-billing problems, discounts, invoice correction chains, collective invoice
corrections and bonus policies.
Regardless of this,
do not forget that preparation won’t end with the proper operation of the
invoicing software. You should also be ready for errors and warning messages
from the tax authority. For preparation error management processes should be
determined and documented, preferably within an invoicing policy of the company. Considering the consequences, if you are not sure in
perfect operation of your invoicing processes, outsourcing can be the solution.
