Further measures to mitigate the economic impacts of the coronavirus pandemic

On April 4, 2020, the government introduced the epidemic prevention fund, to cover the cost of epidemic protection. The following steps serve to cover the HUF 663 billion budget of the fund. 3 and 2024 as well.

The government decree on the measures was published on 6 April 2020 and entered into force on 7 April 2020:

  1. Special tax on multinational retail chains (HUF 36 billion)
  • The special tax already applied in 2010, and will apply to all commercial (multinational company), regardless of whether they sell food or other products.
  1. Banks will have to pay HUF 55 billion into the epidemic fund.
  2. HUF 34 billion from car taxes will be transferred to the central budget from local governments. According to the Decree, the car tax is due to the central budget instead of local governments in 2020. The amounts already received by the local governments must be paid to the central budget within 10 days from the entry into force of the Decree.
  3. 50% of party support for 2020 (HUF 1.2 billion) must be paid into the epidemic fund.
  4. The remaining amount will be covered by the government by increasing the deficit.

In addition to the above, on April 6, 2020 the prime minister announced that an economic action plan has been developed to create as many jobs as the epidemic will destroy. The details of the economic action plan were announced by László Palkovics, Minister of Innovation and Technology on 7 April 2020. The government reallocated HUF 1.345 billion for the economic stimulus package (reaching 18–22% of the GDP). The first phase of the three-step action plan covers the previously announced objectives.

The second stage consists of five pillars:

  1. Job preservation:
  • In the case of part-time work, the government takes over 70 percentage of the wage costs of lost working time from employers (whose relapse is 15-50%) for 3 months. This is applicable if the employees perform some activities for the employer.
  • In the case of those working in engineering and research and development positions, the government provides 40 percent wage subsidy in the next 3 months.
  • Social security contribution will be reduced by 2 percentage points from July 1st.
  • Employees on unpaid leave retain their social security entitlements.
  • The deadline for submitting annual reports and tax returns is postponed until 30 September
  • Guarantee waiver will be introduced in the EKR system, and possibility of automatic repayment will be ensured.
  • VAT refund process will be accelerated from 75 days to 30 days for normal taxpayers and from 30 days to 20 days in the case of reliable taxpayers.
  • Special payment facilities will be introduced such as installment payment, deferred payment and tax reduction.
  • With regard to taxpayer ratings (risky and reliable taxpayers), taxpayers should avoid disadvantages due to possible omissions during the emergency period.
  1. Job creation: the government supports investments worth HUF 450 billion.
  • Simplified tender schemes will be introduced for companies that want to invest during the emergency period or plan technology improvement.
  1. Special support will be provided to certain priority sectors that need to be relaunched: tourism, construction, film and creative industries, agriculture, health, food, construction, logistics, transport.
  • Loan programs will be launched to support development and renovation works.
  • Tourism will be supported with HUF 600 billion.
  • Tourist tax will be suspended until the end of the year.
  • Social security contribution will be reduced to 4% in the case of SZÉP card allowance, and the maximum budget will be increased to HUF 800,000 in the private sector and to HUF 400,000 in the public sector.
  1. Financing of companies: interest and guarantee subsidized loans will be provided to Hungarian companies in the amount of more than HUF 2,000 billion.
  2. Family and pensioner support: the 13th month pension will be rebuilt in four installments. In February 2021, in addition to the January pension, retirees will receive a weekly pension. This will happen in 2022, 2023 and 2024 as well.