The government's measures to ‘whiten’ the economy have been effective: while in 2013 the tax evasion rate in Hungary was 21 percent, by 2019 - surpassing many Western European countries - it had already fallen to 6.6 percent - Mihály Varga informed, commenting on a European Commission study on the VAT Gap
The European Commission acknowledges the results of economic ‘whitening’ in Hungary, the Minister of Finance declared. He explained that before the online era, Hungary was one of the countries in the European Union with the highest rate of tax evasion.
The online era aimed at eliminating the underground economy was started by the government in 2014, when the use of online cash registers became mandatory. The following year, the live operation of the ekaer (Electronic Public Road Trade Control System) was launched, and from July 2018, with the introduction of online invoicing, the scope of tax evasion was further reduced, the Minister of Finance recalled.
Owing to this, in 2018 tax evasion in Hungary decreased the most sharply among European countries, emphasized Mr Varga, adding that with the 5.1 percentage point reduction Hungary achieved better results than Germany already two years ago.
According to a preliminary estimate by the committee, in 2019 the VAT Gap continued to fall, reaching 6.6 percent, which is better than in Austria and Denmark.
The online systems aimed at economic transparency in Hungary not only became role models internationally, but also created the opportunity for tax cuts. During the crisis caused by the coronavirus, it is especially important that, in order to protect fair businesses, no one can escape tax liability, so the fight against black economy must continue, the minister pointed out.
Our goal is to reduce the tax evasion rate to an even lower level, Mr Varga emphasized, noting that in this way, while maintaining the budget balance, the government's tax-cutting policy can also continue, in spite of the coronavirus crisis.