Hungary’s Prime Minister Reiterates the Local Business Tax is a Covered Tax for GloBE Purposes

Yesterday, Hungary’s Prime Minister Viktor Orbán reiterated that Hungary has an Official letter from the EU agreeing to the Local Business Tax being a covered tax for the purposes of the Pillar Two Global Minimum Tax

Under Section 40(1) of Act C of 1990 (the ‘Local Tax Act’) Local Business Tax is levied at up to 2% of taxable income, however, the specific tax rate is determined by the municipality. There is also a different (more restrictive) definition of taxable income than corporate income tax. 

This is particularly important for in-scope MNEs operating in Hungary, as the Hungarian corporate income tax rate is 9% (Section 19 of LXXXI of 1996, law on corporate tax and dividend tax), which is significantly below the 15% global minimum rate. 

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