The tourism sector, which is most vulnerable to the coronavirus epidemic, is being aided by several immediate measures.

“In addition, one million employees could be affected by the concession relating to the Széchenyi Recreation (SZÉP) Card, according to which the spendable limit will be doubling and the tax payable with relation to monies transferred to the card is being halved. In addition to helping enterprises, these measures are also providing significant help to Hungarian families with relation to rest and recreation”, the Ministry of Finance’s State Secretary for Tax Affairs Norbert Izer said in a statement to Hungarian news agency MTI.
“The spendable budget of the SZÉP Cards is almost doubling, while the tax burden on the monies transferred to the card is being halved; this measure could effect one million employees. The reason for the tax cut is that during the period 22 April to 30 June 2020 employers will not have to pay social contributions tax with respect to employee benefits transferred to the SZÉP Card, as a result of which the tax burden will be falling from the current 32.5 percent to 15 percent”, the State Secretary highlighted.

“Parallel to this, in 2020 the recreation budget providable with a favourable tax rate is increasing from 450 thousand forints to 800 thousand forints, and from 200 thousand forints to 400 thousand within the public sector. In addition, guests will not have to pay any tourism tax until 30 December 2020, because the state will be paying it instead of them”, Mr. Izer added.
“All of these measures are providing significant assistance to Hungarian families with relation to rest and recreation”, he emphasised.

Mr. Izer also spoke about the next stage of protection efforts against the coronavirus epidemic, the stage aimed at restoring the economy. “According to one of the latest market analyses, 70.6 percent of people polled in Hungary are planning to travel once the coronavirus epidemic is over, meaning tax concessions relating to this period could significantly increase the turnover of tourism-related enterprises”, he pointed out.

He reminded the press that enterprises active within the tourism sector are currently exempt from having to pay contributions for a period of four months, and this measure is leaving 42 billion forints (EUR 119 million) with the tourism sector until the end of June. “According to the Ministry of Finance’s calculations, the favourable regulations according to which they need only pay personal income tax and a maximum of 7710 forints (EUR 22) a month in healthcare insurance contributions with relation to their wages, affect some 150 thousand people working within the tourism sector. This is making the cost of employment significantly lower for enterprises, while employees are also getting a better deal in view of the fact that their net income will be higher”, the State Secretary noted.

“In the case of a cook employed at the minimal wage, the government will be leaving 71 thousand forints-a-month with the employee and their employer”, he noted, citing as example of the order of magnitude of the measure.
Mr. Izer said exemption from having to pay the tourism development contribution not only affects the sum of payable tax, but also reduces the related administration to zero in view of the fact that the some 15 thousand enterprises affected by the measure will not even have to submit a tax return for the March-June period. From among measures aimed at providing immediate assistance, the State Secretary also mentioned the 1-billion-forint (EUR 2.82 million) force majeure fund established by the Hungarian Tourism Agency to help enterprises that find themselves in a difficult situation because of the coronavirus pandemic.

In closing, the State Secretary also mentioned the reduction in the rate of consumer tax (VAT) that was already introduced at the beginning of this year, pointing out that in the interests of increasing the sector’s regional competitiveness, a lower rate of VAT is being billed within tourism. “The lower rate of VAT could be highly significant when international tourism also commences again, since the lower rate of VAT will enable Hungarian tourism companies to offer cheaper holidays than foreign companies”, Mr. Izer pointed out.

(Ministry of Finance/MTI)