Small Business Act - Database of good practices

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160

Year of submission

2007

01. Title of the measure

Tax break on investment reserves

02. Country

03. Language

English

04. Contact details

Responsible organisation	The rules are set out in tax laws drafted by the Ministry of Finance and adopted by Parliament.
Name and Surname of contact person	Péter ZÓLYOMI
Street and number	Pénzügyminisztérium, 1051 Budapest, József nádor tér 2-4.
Postal code
City
Country	HU
E-mail of contact person	zolyomi@pm.gov.hu
Website of organisation	www2.pm.gov.hu

05. SBA policy area

Taxation

06. Source

European Charter for Small Enterprises

07. Description of the measure

All companies are entitled to deduct from their corporate tax base the amount which is transferred from profit reserves to fixed reserves during the tax year, if it is shown in the balance sheet line for fixed reserves on the last day of the tax year. The deductions are capped at 25% of the pre-tax profit, or HUF 500m per tax year. The taxpayer may release the reserves over the four following tax years to the extent of spending on new investments during the period. However, such investments are not eligible for deductions from the corporate-profit tax base. Self-employed persons taxed under the scheme for incorporated entities are also eligible for the concessions. The rules are specified in Act LXXXI of 1996 on company tax and dividend tax and in Act CXVII of 1995 on personal income tax.

08. Objectives

To stimulate investment

09. Duration (dd/mm/yyyy)

Start Date
End Date	Measure open-ended
Other Information	01/01/2003 - ongoing

10. Target group

All businesses

11. Have you consulted business organisations before submitting this measure?

Yes

11.1 Comments/testimonial by business organisation/entrepreneur

12. Results achieved

Around 16 000 businesses benefited from the concessions in 2005. This is about 2% of all registered businesses (710 000). Deductions totalled HUF 138bn. Given a corporate-profit tax rate of 16%, this resulted in a total of HUF 22.1bn in profit tax concessions.

13. Evaluation

14. Why is this measure a success? Please give information on results and achievements.

15. Problems that had to be overcome and lessons learned

16. Information on the measure can be provided in the following languages

Send feedback about this good practice

European Commission - Growth

Small Business Act - Database of good practices