Changing rules / 2018 – KIVA, KATA

Itemised tax of small businesses (“KATA”)

From next year full-time students registered in institutes of secondary or higher education will no longer be considered as full-time entrepreneurs, which means that they can will only have to pay 25,000 HUF as the small taxpayer’s flat tax instead of 50,000 HUF.

Under current regulation “ KATA” subject status will be terminated if the net tax debt of the small taxpayer exceeds HUF 100,000 on the last day of the calendar year. From next year it will be allowed for the tax authority to suspend the process if the taxpayer pays his debt until the declaration becomes legally binding and confirms it.

Small business tax (“KIVA”)

While it was part of the tax package submitted earlier, it is still worth noting that the “kiva” tax rate will continue to decrease further from 2018, by another percent point, to 13%. In the future, the taxpayer status will not be terminated if the business pays its outstanding tax obligation exceeding 100,000 HUF by the date when the decision on the termination of the tax status becomes effective.

In harmony with earlier interpretations of the law, the text of the legislation will clearly provide now that in case of switching to “KIVA” taxpayer status, an independent business year is to be closed, and the business needs to prepare and publish its report on that business year.