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local business tax

Local business tax is the most common form of local tax. The tax is payable on entrepreneurial activities performed in the administrative area of the municipality on a permanent or temporary basis. Local business tax is payable by the entrepreneur whose seat or site is located in the administrative area of the municipality (permanent activity) or which perform entrepreneurial activity in the territory of the municipality on a temporary basis for over 30 days (but not reaching 181 days). 

The tax base is the net sales revenue less the cost of goods sold, intermediated services, subcontractor performance, direct cost of research and experimental development and material cost. The maximum tax rate is 2 percent of the tax base. Municipalities may diverge from this rule and may also decide not to introduce local business tax. In the case of business activity performed on a temporary basis, the tax rate is maximum 5,000 forints per calendar day. 

Regulated real estate investment companies, their pre-companies and project companies are exempt from tax. 

Procurement and sales associations are exempt from tax. In addition, the municipality may also provide for further exemptions from tax and tax allowances in a regulation for companies whose tax base does not exceed 2.5 million forints.  

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