Hungarian Parliament Approves Tax Package Favoring State Gambling Enterprise
The recent tax reform alters gambling regulations, potentially reducing local government revenues in Hungary.
On Wednesday, the Hungarian Parliament approved the tax package for Spring 2025, with the most notable change pertaining to gambling taxation.
The modification has sparked considerable debate among political figures, particularly between Gergely Karácsony, the Mayor of Budapest, and Márton Nagy, the Minister of Economic Development.
Mayor Karácsony contended that the changes favor casino owners at the expense of municipal budgets, a claim that the Ministry of Economic Development disputed.
Following a detailed investigation, evidence shows that Minister Nagy’s assertion holds that the tax alterations specifically affect only Szerencsejáték Zrt., the state-owned gambling company, rather than all casinos.
Nevertheless, it has been confirmed that the changes will result in a substantial reduction of local government revenues, estimated at 18 billion HUF (approximately 50 million EUR).
This adjustment appears to serve the interests of a monopolistic state enterprise at the expense of municipalities' financial health.
Additional significant changes within the tax framework include provisions raised to a legislative level for sector-specific and excess profit taxes.
The implementation of mandatory sustainability reporting obligations has been postponed by two years.
A new transaction fee will be introduced for e-money accounts, and fresh disclosure options along with corporate tax reliefs are set to be established, notably increasing the tax base reduction cap for research and development activities to 150 million HUF.
Changes to the global minimum tax system include modifications to deadlines related to supplementary tax liabilities.
New benefits will be introduced for mothers under 30, those with two or three children, and beneficiaries of childcare support.
Furthermore, there will be new regulations concerning the deadline for auditing multi-taxpayer transactions.
The Parliament also voted to amend the central bank law, passing the proposal with 133 in favor, 29 against, and 24 abstentions.
This amendment aims to enhance the operational effectiveness of the Magyar Nemzeti Bank (MNB) in fulfilling its core banking and statutory tasks, while also limiting the establishment of foundations for non-essential activities.
The backdrop to this legislative change includes the recent leadership transition at the MNB and a scandal relating to significant public funds mismanaged under former governor György Matolcsy.
The new governor, Mihály Varga, intends to streamline the MNB's functions by eliminating unnecessary activities, a move supported by this newly approved law.
Under the new regulations, the MNB will still have the ability to establish economic entities or foundations aligned with its objectives, but it will be prohibited from creating investment foundations similar to the controversial PADME foundation.
This amendment does not retroactively affect previously established foundations, ensuring that PADME remains in operation while the MNB focuses on optimizing existing assets to maximize returns on previously invested public funds.
Additionally, the approved changes expand the monetary council from nine to eleven members by increasing the number of deputy governors from three to four, with an additional independent member to provide balance.
The modification has sparked considerable debate among political figures, particularly between Gergely Karácsony, the Mayor of Budapest, and Márton Nagy, the Minister of Economic Development.
Mayor Karácsony contended that the changes favor casino owners at the expense of municipal budgets, a claim that the Ministry of Economic Development disputed.
Following a detailed investigation, evidence shows that Minister Nagy’s assertion holds that the tax alterations specifically affect only Szerencsejáték Zrt., the state-owned gambling company, rather than all casinos.
Nevertheless, it has been confirmed that the changes will result in a substantial reduction of local government revenues, estimated at 18 billion HUF (approximately 50 million EUR).
This adjustment appears to serve the interests of a monopolistic state enterprise at the expense of municipalities' financial health.
Additional significant changes within the tax framework include provisions raised to a legislative level for sector-specific and excess profit taxes.
The implementation of mandatory sustainability reporting obligations has been postponed by two years.
A new transaction fee will be introduced for e-money accounts, and fresh disclosure options along with corporate tax reliefs are set to be established, notably increasing the tax base reduction cap for research and development activities to 150 million HUF.
Changes to the global minimum tax system include modifications to deadlines related to supplementary tax liabilities.
New benefits will be introduced for mothers under 30, those with two or three children, and beneficiaries of childcare support.
Furthermore, there will be new regulations concerning the deadline for auditing multi-taxpayer transactions.
The Parliament also voted to amend the central bank law, passing the proposal with 133 in favor, 29 against, and 24 abstentions.
This amendment aims to enhance the operational effectiveness of the Magyar Nemzeti Bank (MNB) in fulfilling its core banking and statutory tasks, while also limiting the establishment of foundations for non-essential activities.
The backdrop to this legislative change includes the recent leadership transition at the MNB and a scandal relating to significant public funds mismanaged under former governor György Matolcsy.
The new governor, Mihály Varga, intends to streamline the MNB's functions by eliminating unnecessary activities, a move supported by this newly approved law.
Under the new regulations, the MNB will still have the ability to establish economic entities or foundations aligned with its objectives, but it will be prohibited from creating investment foundations similar to the controversial PADME foundation.
This amendment does not retroactively affect previously established foundations, ensuring that PADME remains in operation while the MNB focuses on optimizing existing assets to maximize returns on previously invested public funds.
Additionally, the approved changes expand the monetary council from nine to eleven members by increasing the number of deputy governors from three to four, with an additional independent member to provide balance.
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