Реферат: Country Study, Hungary

Corporate Income Tax

The corporate tax is levied on all businesses, no matter how large or small, the same way. As of January of 1995 the corporate income tax has been reduced from 36% to 18% on undistributed profits before tax. this is called either the additional tax or the calculated tax. After this tax has been levied the profits are then distributed among the shareholders and an additional 23% is taxed to the shareholders. To illustrate this tax figure 1.3 demonstrates how the tax is calculated.

fig 1.3

Calculation of Additional Tax

HUF

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Income before tax

100.00

Calculated at 18%

(18.00)

Income after tax to be distributed

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82.00

Amount available for distribution after payment of additional tax (82/1.23)

66.67

Total Tax Paid

33.33

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Effective Rate of the additional tax (% of income before tax

15.33%

Source Deloitte & Touche LLP

In addition to the corporate tax employers must also make Social Security contributions. Typically, employers must make a contribution at a rate of 44% of their gross salary. Employees are required to make a 10% contribution, however, it not unlikely to see individuals putting more than 10% away of retirement.

Another tax that employers are subject to is the Unemployment Fund Contribution. This is to continue to support the unemployed between work. Employers must pay 4.2% of their employees gross salary and wages to the Unemployment Fund. Employees are required to pay 1.5% of their salary. However, employees' contribution is tax deductible.

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Training Fund Contributions is yet another tax that corporations are subject to. This tax is to provide for the cost of training employees. This contribution is currently paid by the employer at 1.5% of the total payroll. This tax is for corporate income tax purposes.

As with other Hungarian taxes exemptions are offered to certain kinds of business. Hungary grants exemptions on a case by case basis and either dose not grant an exemption or grants a 100%, or 60% exemption. The figure below shows how companies are allowed to use their exemptions.

fig. 1.4

Percentage of Taxes due under specific exemption

18% subject to Corporations

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23% subject to Shareholders

100% Exemption

100% reduction

No Reduction