The Tax Foundation, an independent research institute based in the U.S., has examined the tax systems of the 38 OECD (Organization for Economic Co-operation and Development) member states from a competitiveness perspective, and Hungary once again performed exceptionally well.
Based on their analysis, they created a ranking whose criteria were not based on the level of the various types of taxes, but on the structure, transparency, and clarity of the entire tax system and its impact on economic development. More than 40 variables were examined for five main types of taxes (corporate income tax, personal income tax, excise tax, property tax, and taxes on cross-border transactions).
Among the 38 OECD member states examined, Hungary ranks ninth, and among the 27 European countries examined, ranks sixth in terms of tax competitiveness.
According to the Tax Foundation, the country achieved this ranking thanks to the nine percent corporate income tax, which promotes entrepreneurship and attracts foreign investment, along with the 15 percent flat income tax, which contributes to the transparency of the economy. The low employer tax burden, which promotes activity in the labor market, is highlighted as particularly positive. The lag behind the countries ahead on the list is due to taxes that burden consumption.
Due to reforms in the tax system and extensive tax relief for businesses and individuals, the country’s position has been improving for decades.
While Hungary ranked 23rd in 2016, within the organization, which at that time consisted of only 35 countries, it has since improved to ninth place.
The studies and reports of the Tax Foundation, which is considered authoritative among organizations that compare tax systems, are also taken into account by international investors, therefore Hungary’s favorable ranking represents a significant gain in prestige. Sixth place within Europe highlights the country’s competitiveness in the region, according to the foundation’s analysis.
Cover Photo: The Hungarian Parliament Building, Budapest. Photo: Pexels
