Corporate profit tax rate is about to be changed in Hungary to the EU lowest rate of 9% from the current 10% starting from 2017 for the companies below the HUF 500 mln(approx. EUR 1.5 mln) profit threshold. The other country with 10% rate is Bulgaria. As an additional move Hungary wants to lower the VAT on internet services to 9% which is an apparent attempt to make the country more attractive to small internet companies that want to operate within the European Union.
The corporate tax, especially for small businesses tends to fall all around the EU as states attempt to encourage entrepreneurship. It’s also because of capital moving across borders and companies operating or at least paying taxes wherever the costs are lower. Recently Polish government slashed the corporate tax rate for small companies to 15% from 19% and while it’s still at 19% in Czech Republic and 22% in Slovakia, these numbers are very likely to be lowered among informatization of the economy and growth of number of small internet-based enterprises.
Cutting the corporate tax rate is just one of the ways to make business climate more optimal since it is not targeted enough and doesn’t encourage innovation by itself. However, there is a growing number of government programs giving away grants and tax breaks that target tech and newly founded companies and that have been introduced in many forms in recent years among Central European countries.
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