Jó napot! It is getting so cold in Hungary that my breath turns white in the mornings and evenings. I am currently learning about the global legal environment and I have learned some interesting facts about tax laws, so I would like to report on them together with information about the social security system as it strongly related to the tax laws.In addition to that, social security includes unemployment insurance in addition to health insurance and pension programs. In Japan, a large percentage of the budget for social security comes from the government treasury, but in Hungary, social insurance contributions and other taxes are the only sources of funding. Both systems seem to have their advantages and disadvantages: if the government issues currency bills to cover the treasury's share, the value of the currency declines, and if it does not issue bills, the tax burden on the people becomes heavier.Meanwhile, social insurance is divided equally between the employer and the worker in Japan, but in Hungary, the employer pays 13% of the salary paid to the worker, and the worker pays 18% from their salary. Workers are entitled to a tax exemption of a maximum of 15% if they do not take deductions based on the number of dependent children they have.The tax rate on personal income is set at a flat rate of 15%, rather than a progressive tax system like in Japan. Among them, other tax rates are applied to people of certain ages and status. Here are three of the most characteristic ones.The first is that there is no income tax on young people under the age of 25. This applies to foreign students and immigrants as well, and there are many Social SecurityIn Hungary, a social security number called TAJ (Társadalombiztosítási Azonosító Jel) is issued to individuals who are covered by social security. Individuals with a number are provided with a TAJ card. The card is free of charge for students and workers and can be used by others for 9,600 forints (about 4,000 yen) per month. The TAJ card is used like a health insurance card in Japan and is used as proof of identity when using medical services at hospitals and pharmacies, as well as for administrative procedures related to pension insurance.Tax LawsBelow is a table comparing Hungary's tax revenues with those of OECD countries. It is clear that instead of a low percentage of corporate income tax, there is a large percentage of consumption tax and social insurance tax, which is levied on both individuals and corporations.The corporate income tax rate is 9% in 2023, the lowest among the 38 OECD countries. Possibly because of this, Budapest is often used as an area for large companies to set up their Central European offices. I have the impression that consulting firms, automobile manufacturers, and financial services, including banks, are particularly prevalent. These companies are likely to make full use of geographical advantages and utilize their high profit margins enabled by the low tax rates.9Omito Ono International Business School Budapest Social Security and Tax Laws in Hungary
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