Analysis of the taxation environment and tax burden of companies in the Hungarian agricultural sector

Molnár, Barna – Goda, Mátyás

Keywords: basic principles of taxation, taxation competition, corporate tax, tax burden, tax allowance

There are two major factors, which can be identified behind the recent remarkable changes in Hungarian taxation policy. These are the switchover to a market economy at the end of the 80’s and accession to the European Union. The resulting processes are the reduction of tax rates, the widening of the tax base, the reduction of tax allowances and international conformance. But the changes have not yet finished. The tax policy systems face new challenges such as globalisation, competitiveness and sustainability.

Within the investigations we tried to find opportunities for the Hungarian taxation system to meet all the new requirements. First we checked international aspects - the situation of European tax policy issues. We reviewed the appearance of three main dimensions of sustainability within taxation. We tried to define the corporate taxation level in Hungary with respect to agricultural enterprises and compare it with the tax burden in European member states. The implicit tax burdens were calculated by size, by type of activity and by regional aspects for these enterprises.

The conclusions show that the economic situation at the companies investigated worsened up until 2005 and that the tax burden in Hungary is considered to be competitive compared to the other member states. The nominal trend is decreasing, but if we consider the impacts of tax allowances the trend is the opposite. The highest taxes were paid by the bigger companies located in the Central Hungary and Central Transdanubia regions, which deal with animal breeding or mixed activity in general.