Hungary to restore KATA small‑business tax for up to 350,000 firms in 2027

Finance Minister András Kármán confirmed that the government will reinstate the KATA (small‑business flat‑tax) regime with wide eligibility from 1 January 2027. The restored scheme will allow micro‑entrepreneurs to invoice companies again while keeping the tax simple and low‑administration.

The GKI economic research institute estimates that 300‑350 000 entrepreneurs could be directly affected, with 250‑270 000 potentially returning to the KATA system. After the 2022 tightening, the number of KATA users fell from about 444 000 to 145 000, with 35 000 firms closing and 264 000 switching to other tax forms. At its peak the regime generated roughly HUF 200 billion in annual budget revenue. Details of the new rules—such as the monthly flat‑tax amount, revenue ceiling and limits on income from a single client—are still pending. The government says the redesign aims to preserve simplicity, prevent hidden employment, and ensure adequate social‑security coverage, while also influencing labour‑market dynamics and corporate HR strategies.