回應部門: Ministry of National Economy (MNE), Ministry of Foreign Affairs and Trade (MFAT)
Note: This response was originally submitted in Hungarian (see here). Unofficial English translation provided by Business & Human Rights Resource Centre.
The establishment of the relevant responsibilities within the government is in progress. The concerned issue relates – though not necessarily in the first place – to the responsibilities of the Hungarian National Contact Point (HNCP) that is operating under the Ministry for National Development, at the International Financial Supervision Department, under the supervision and guidance of the National Council of the OECD and the Deputy Secretary of State Responsible for Finance Policy. In addition, with respect to the concerned foreign trade and multilateral diplomatic aspects, the issue relates to the responsibilities of the Ministry of Foreign Affairs and Trade, and more particularly to the responsibilities of the Human Rights Department operating at the International Organisations Division under the Deputy Secretary of State for International Cooperation.
Types of company impacts prioritised:
- Tax avoidance
- Other: Strengthening the activities of the OECD Hungarian National Contact Point
- Women’s rights
- Indigenous groups and/or ethnic & racial minorities ethnic & racial minorities
- Abuses linked to security for company operations (e.g.: torture & ill-treatment)
Planned for the future (not yet listed under 3.1):
By 6 December 2016, Hungary is obliged to implement the European Parliament's 2014/95/EU Directive and the Council's 22 October 2014 amendment to Directive 2013/34/EU regarding disclosure of non-financial and diversity information by certain large undertakings and groups.
The Social Renewal Operational Programme (SROP), co-funded by the European Union, provides grants to combat discrimination: The TÁMOP 1.1.1.
With the help of the programme called "Improving the system of employment rehabilitation" people with altered working capabilities are able to find profession, workplace, individual counselor, and their employers are granted 100 % wage subsidies and other financial benefits. The predecessor of the supporting innovative experimental employment programmes of TÁMOP 1.4.3. is the Hungarian programme within the EQUAL Community Initiative through which various innovative experimental projects were realized to reduce discrimination and inequalities in the labour market. The TÁMOP programmes support the testing and the application of new methods or methods already applied successfully elsewhere, in particular through the introduction of comprehensive training and employment programmes for long-term unemployed and low-skilled people living in the country's most disadvantaged sub-regions with few employment opportunities.
On the Hungarian OECD National Contact Point's (NCP) website, which operates under the Ministry of National Development, there is relevant information available about the OECD Guidelines for Multinational Enterprises (Guidelines), including references to the United Nations documents related to human rights. In order to promote the Guidelines, the Hungarian OECD NCP participates in the most relevant local events related to corporate social responsibility either with an exhibition stand and/or by disseminating the brochure on the Guidelines or the translation of certain chapters of the Guidelines.
In 2011, Hungary joined the Montreux Document on private military and security companies and in 2012 the Optional Protocol to the Convention against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment.
Some of the most relevant administrative, organizational and legal measures taken against tax avoidance
Administrative and organizational measures:
- the establishment of the integrated National Tax and Customs Administration (NAV) – the new organization that unites the tax and customs authorities builds on the efficient and cost-saving principles of public administration and ensures the complete control and protection of all tax and other fiscal revenues, if needed, even supported by criminal law related measures through the Directorate General for Criminal Matters;
- constant improvement of risk management;
- new control methods and approaches, examination of periods close to present date;
- control operations in sectors affected by fraud.
1. Tax registration process and increased tax authority control mechanism
From 1 January 2012, according to the newly introduced tax registration process, newly established companies do not automatically receive a tax number, but only following a preliminary screening. The increased tax authority control mechanism allows the tax authority to conduct a risk analysis procedure after a tax number is assigned and the business share has been transferred. The tax authority may also send out a questionnaire in order to verify the personal, material and financial conditions necessary for the activity requested to be performed by the taxpayer.
2. Domestic Summary Declaration
From 1 January 2013, according to Article 31/B of the Act on the rules of taxation (Act no. 92 of 2003 on the rules of taxation) each individual taxpayer is obliged to declare all domestic sales and purchases item-by-item as a trading partner, where the value added tax charged reaches or exceeds 2,000,000 Hungarian Forints or where the value of the individual purchases remain under 2,000,000 Hungarian Forints, or the consolidated amount for the entire accounting period exceeds 2,000,000 Hungarian Forints for the trading partners.
3. Elimination of tax number without prior suspension
The new provision ensures stronger action by providing the possibility for the tax authority to erase a tax number - according to the terms defined by the law and even without prior suspension – of those fictional taxpayers that do not carry out real economic activity, do not fulfill their tax-related obligations for a long time and that are impossible to reach.
4. Covert sample purchases
Essentially, if the tax inspector finds no wrongdoing during a covert sample purchase, he or she is not obliged to disclose his or her identity.
5. Procedures for verifying the authenticity of economic events
During the procedure for verifying the authenticity of economic events, the tax authority verifies only questionable economic events without regard to the tax period, which helps to conduct a rapid and targeted procedure.
6. Time available for the allocation of reclaimed value added tax changed to 75 days
In 2012, the time available for the allocation of reclaimed value added tax was increased to 75 days. This allows additional time for a more careful selection and any potential relevant verifications. It also allows for the thorough assessment of economic activity as well as more information gathering for a transition to back-testing, as well as the conclusion of more evidence-based decisions.
7. Introduction of online cash registers
The transition process to the system of online registers can be considered efficient and successful. On 5 October 2014, the number of cash registers connected to the tax authority exceeded 179,000, which indicates that the transition is taking place at a good pace and according to expectations.
8. The use of publicly available information from the internet
During the controls useful information can be collected from the data placed on the Web. The tax authority collected information from the internet after 1 January 2012 primarily related to aesthetic and cosmetic service providers, online shops, and services related to real estate renting.
9. Tightened system of sanctions
Tax arrears revealed during tax inspections are sanctioned with a tax penalty. The tax penalty rate is 50 % of the tax arrears. In contrast to the previous tax penalty rate of 75 %, for the very grave and unlawful practices of concealment of income, bills, books, or the falsification and destruction of records, the legislature increased the tax penalty rate to 200 %. From 1 January 2012 the law introduced special sanctions on repeated violation of the obligation to keep records related to the determination of the normal market price by putting into place a potential tax penalty of up to 4 million Hungarian Forints per consolidated records and for a repeated failure related to the same records, a tax penalty of up to four times the initial tax penalty. An additional example of the significant tightening of the system of sanctions is that instead of the previous general tax penalty line, according to the new provisions the taxpayer can be sanctioned with a tax penalty of up to 1 million Hungarian Forint for failing the obligation of retention. If the taxpayer does not retain the printed invoice or receipt, regardless of whether the invoice or the receipt was actually used, the tax penalty can reach in case of enterprises 500,000 Hungarian Forints multiplied with the number of missing invoices and receipts.
10. Tightened cash flow
From 1 January 2012 the threshold of the obligation of cash payment notification between non-associated enterprises was reduced from 5 million Hungarian Forints to 2 million Hungarian Forints. The objective of this notification obligation is that the tax authority becomes informed about cash payments above a certain magnitude. From 1 January 2013 in addition to the notification obligation the law requires from those taxpayers that are under the obligation to open a current account, to perform a cash service only up to 1,5 million Hungarian Forints in a calendar month. Those who do not comply with the restrictive provisions can be sanctioned by the tax authority with a tax penalty of 20 % of the amount above the 1,5 million Hungarian Forints cash service provided. There is no margin of discretion regarding the determination of the tax penalty.
11. Electronic Control System for the Path of Goods (EKAER)
The EKAER is a comprehensive system of control to be introduced in 2015, with the objective of detecting the origin and the path of goods, more particularly related to the supply of goods / the procurement of goods and the first domestic taxable sales-related deliveries within the European Community. The EKAER operates with the help of the e-toll and road camera network, as well as a physical verification system, organised according to the NAV risk analysis system, and based on an electronically recorded and analysable data on transport. The aims of the EKAER are to monitor the path of goods, to suppress frauds related to value added tax, to ensure the payment of the relevant tax concerning the supply and sale of goods, and to guarantee that only those goods are placed on the Hungarian market that are verifiably not risky according to audit experiences and that have been declared to the local tax authority.
12. The role of exchange of information in the combat against tax avoidance
Exchange of information contributes to States’ efforts in enforcing their own internal taxation laws while respecting the rights of the taxpayers. The tax information exchange network allows for Hungary to request and share tax related information in relation to 103 other countries, which significantly adds to the suppression of tax avoidance. The expansion of the network was greatly supported by the fact that in November 2013 Hungary signed the Convention on Mutual Administrative Assistance in Tax Matters and its Protocol that was promulgated by Act no. 42 of 2014. Since June 2011 the number of the conventions of Hungary on the avoidance of double taxation has also increased, which equally allows for the exchange of information in tax matters. New conventions of this kind are as follows: the Hungarian-Danish convention (promulgated by Act no. 83 of 2011), the convention between Hungary and the United Arab Emirates (promulgated by Act no. 161 of 2013), the Hungarian-Georgian convention (promulgated by Act no. 14 of 2012), the convention between Hungary and Qatar (promulgated by Act no. 15 of 2012), the convention between Hungary and Kosovo (promulgated by Act no. 187 of 2013), the convention between Hungary and Mexico (promulgated by Act no. 145 of 2011), the convention between Hungary and the United Kingdom of Great Britain (promulgated by Act no. 144 of 2011), the Hungarian-German convention (promulgated by Act no. 84 of 2011), the convention between Hungary and Switzerland (promulgated by Act no. 163 of 2013), the convention between Hungary and Saudi Arabia (promulgated by Act no. 52 of 2014), and the convention between Hungary and Bahrain (promulgated by Act no. 49 of 2014). In addition to the conventions on the avoidance of double taxation, Hungary also signed conventions on the exchange of information related to tax matters with Guernsey and Jersey and promulgated in Act no. 162 of 2013 and in Act no. 50 of 2014.
In the fight against tax avoidance – in addition to the exchange of information upon request – yet another important tool is the automatic exchange of tax-related information, according to which States automatically send to each other certain types of information. As a member of the EU, Hungary applies the relevant rules related to the automatic exchange of information. In addition, Hungary signed on 29 October 2014 the multilateral Standards for Automatic Exchange of Financial Account Information in Tax Matters that allows for the exchange of respective information with 50 countries’ relevant authorities.
The Hungarian Government supports in various ways and with different programmes the employment of women, such as:
- TÁMOP 1.1.2. And 1.1.4. to improve the employability of disadvantaged people, which includes among others supporting the employment of mothers with young children with wage subsidies and training.
- The Women40+programme supports those women, who have only maximum three years left until the acquisition of 40 years of service and are registered jobseekers. The State undertakes from the employer the duty of providing 100 percent of wages up to 10 months and other contributions within a specified amount, provided that the employer agrees to the woman’s additional employment for another two months without support.
- The GYED EXTRA package of specific measures makes the life of mothers returning to work easier from 1 January 2014. The package among others allows unlimited employment in addition to the different childcare allowances (GYED and GYES), provided that the child is one year past.
- The extended Workplace Conservation Action Plan fosters the easier return of mothers with three or more children to work. Since 2014 employers are exempted during the first three years from payment of social contribution tax and in addition to that, during the fourth and the fifth years they only need to pay 14.5 % of the tax.
As a result of the different job-creation programmes, since 2011 employers that employ workers of Roma origin at newly established workplaces receive, in addition to the 1,500,000 Hungarian Forint support, 300,000 Hungarian Forint more support.
The examination of the national implementation of the UN Guiding Principles on business and human rights and the adoption of a related National Action Plan forms part of the Government’s plans for the future. For the time being, with the adoption of the CSR Action Plan the Hungarian Government promotes the business and human rights by encouraging non-discriminatory employment.
When considering the adoption of the National Action Plan, the Hungarian Government will look at all relevant factors, including the international human rights standards that make part of the Hungarian legal system, as well as the necessary public consultation.
Following the re-organisation of the Hungarian OECD NCP in September 2014, the renewal of the NCP complaint procedure is underway and is expected to be adopted by the end of the year.
- Lack of resources for enforcement, monitoring and prosecution
- Lack of understanding or awareness of business & human rights in government
- Challenges of coordinating across government departments