Hungary anti VAT fraud measures

Wed 14th May 2014

The Hungarian government is stepping-up measures to combat the growing problem of Hungarian VAT fraud. Since increasing the Hungarian VAT rate to 27%, there has been a marked increase in fraudulent activity, and drop-off in revenues. The OECD states that VAT fraud typically becomes a major problem for countries once the indirect VAT tax rises above 10%.

The current Hungarian VAT measures include:

  1. Extended the use of the VAT reverse charge provision to a number of sensitive industries
  2. Reclassified a number of categories of goods subject to fraud to lower VAT rates e.g. raw meats
  3. Separate declarations in VAT returns for invoices about HUF 2 million
  4. Increased the powers of the VAT inspectors to seize cash and assets of non-compliant taxable persons
  5. Made online cash registers compulsory so there was direct reporting of cash receipts to the tax authorities