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Amendments to laws published in the Official Gazette – part 1: Law on Tax Procedures — Orbitax Tax News & Alerts

On 19 June 2012, Law LXIX (Law) amending several tax laws was published in the Official Gazette. The most important features of the Law amending the Law on Tax Procedures are summarized below.

The Law places a new obligation on taxpayers regarding cash payments. According to the new modification, taxpayers, who have the statutory obligation to open a bank account are also required to carry out their payments related to their taxable activities in accordance with the regulations of the new Law. Consequently, the taxpayers concerned will not be able to carry out cash payments over HUF 5 million. This obligation applies in respect to payments made in the same month as consideration for sale of goods or provision of services, after 1 January 2013, between taxpayers who are obliged to open bank accounts, irrespective of whether the transactions are based on a contract between the same parties or between other taxpayers. As the new rule applies on a contractual basis, and could be circumvented if the payments are fragmented, an anti-avoidance rule is implemented. Fragmented payments made to the same taxpayer on the basis of contracts between the same parties will be regarded as one payment if abuse is established. In case of non-compliance with the new regulation, 20 % of the amount paid in cash above the HUF 5 million threshold must be paid as a default penalty.