Hungary tax reforms spark debate over kata and wealth tax

Hungary is undergoing a social consultation regarding significant changes to its taxation system, specifically concerning the 'kata' (small business flat-rate tax) and a proposed wealth tax.

Regarding the kata tax, the National Association of Accountants (MKOE) has criticized the government's draft as overly complex and contradictory. The MKOE has submitted an alternative proposal featuring 318 points, aiming for greater automation through the National Tax and Customs Administration (NAV) and seeking to allow small businesses to invoice companies again, potentially subject to a 15 percent supplementary tax. While the Veszprém County Chamber of Commerce welcomed the potential for small businesses to invoice companies, they noted the need for careful regulation to prevent disguised employment.

The proposed wealth tax, scheduled to take effect in December 2026, has met with strong opposition from various business groups. The Magyar Nemzeti Kereskedelmi Szövetség (Hungarian National Retail Association) argues the tax is discriminatory against Hungarian-owned businesses and could harm competitiveness and employment. Experts and business owners have expressed concerns that the tax may unfairly target successful entrepreneurs and create a negative social message, while some legal experts note the draft is well-structured but covers a very wide range of assets and individuals.