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Flat CIT rate and minimum wages in Hungary from 2017

On 24 November 2016, the Government and the employer and employee organizations signed an agreement about minimum wages for 2017 and 2018.

Minimum wages

On 24 November 2016, the Government and the employer and employee organizations signed an agreement in which they agreed on the following:

  • The minimum wage will increase by 15% (up to HUF 127 500) in 2017 and
  • the guaranteed wage minimum by 25% in 2017 (up to and HUF 161 000).
  • The minimum wage and the guaranteed wage minimum are predicted to be increased in 2018 by an additional 8% and 12%, respectively. 

Moreover, social contribution tax of the employer will decrease by 5% in 2017 and expectedly by an additional 2% in 2018.

Moreover, the parties have agreed that if in the first nine months of 2017 the gross wage increase exceeds 11%, the Government will initiate that as of 1 January, 2018 the social security payments of the employer be decreased by an additional 0.5%. Altogether, social security payment obligation of the employer may decrease by 2.5% in 2018.

The Government is expected to submit the draft proposal to the Parliament in order to pass a law on this already on 24 November, 2016.

Corporate Income Tax: 9 percent, flat rate for enterprises

The government announced that a new flat rate system would be introduced instead of the  existing progressive rates of 10 percent and 19 percent. The current progressive rates will be lowered to a flat rate of 9 percent from 2017.

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