Hungary ups VAT rate
Tuesday May 12, 2009
Politicians in Hungary have agreed a major new tax law which will see the rate of VAT in the country increased by five per cent.
The country’s parliament has revealed that the decision to up the rate from 20 to 25 per cent from the start of July was approved in a major vote involving the country’s ministers.
However, the rate of VAT on certain categories of products, including basic food and heating bills, is set to remain at just 18 per cent.
It is hoped the decision will boost the Hungarian economy, which is expected to shrink by up to six per cent over the course of this year.
As well as increasing VAT, the country’s government is also cutting state pension instalments.
The decision of the parliament has come after the European Union last week confirmed that lower VAT rates can now be offered on a number of labour-intensive services.