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Hungary calls to cut reduced VAT on foodstuffs


Hungary calls to cut reduced VAT on foodstuffs

There have been renewed political and industry calls for a cut to the Hungarian VAT rate on foodstuffs due to ongoing fraud schemes.

Currently, Hungary levies the full standard 27% VAT rate on foodstuffs.  This is high compared to other EU member states, which tend to charge between 0% and 7% on basic foods.

Action to combat Hungarian VAT fraud

This week, the National Economic Ministry restated that is would wish to reduce this rate in 2013.  This follows continuing pressure from the international food processing industry to cut the high rate.  They believe that such rates encourage Hungarian VAT fraud on their produce, and so have indicated that they would focus their production in other countries.  In 2012, they established a campaign to have the VAT rate reduced, but were blocked by the Troika of the ECB, EU and IMF which has been providing bail-out funding for Hungary.  They feel any cut would undermine their efforts to help reduce the Hungarian state deficit.

The debate will continue through 2013 in the run up to the next elections.


VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.