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Deductions from the corporate tax base during the state of emergency

On 30 April 2020 another tax relief has been published with regards to the state of emergency.
This time, the provisions of tax base deductions set out in Act LXXXI of 1996 on Corporate Tax and Dividend Tax are extended in the tax years during the emergency and in the taxpayer's choice in the tax year 2019 as well, in accordance with the following:

1. The pre-tax profit is reduced by the amount of earnings retained and transferred to the reserve in the tax year by the corporate taxpayer and shown as a reserve on the last day of the tax year, but not more than the pre-tax profit and up to HUF 10 billion per tax year ("development reserve"). Prior to the tax relief, the development reserve could not exceed 50% of the taxpayer's pre-tax profit for a given tax year, this restriction does not apply under the new rules.

2. If the taxpayer chooses to apply the new rule to the 2019 tax year, but has already submitted its 2019 tax return by 1 May 2020, it may form a reserve for the 2019 tax year in accordance with the rules of accounting control within a self-revision procedure. until 30 September 2020.

3. If the tax return has not yet been submitted, but the taxpayer already has an approved financial statement, it may form a reserve for the approved report in accordance with the rules of accounting control.

Should you have any further questions, feel free to contact CLV Partners’ colleagues HERE.
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