The Fidesz majority in Parliament passed a new law on Tuesday afternoon transforming a popular tax scheme for small-scale entrepreneurs to make it a much less desirable option. The bill was passed with 120 MPs in favor, 57 against, and one abstention.
In the future, businesses invoicing under the KATA tax structure will only be able to receive income from private individuals, not from companies.
Perhaps expecting a backlash to the move, the government rammed the law through Parliament at a remarkably rapid pace: submitted at noon on Monday, it was debated on Tuesday morning and came to a vote on Tuesday afternoon. Only a few MPs from governing party Fidesz took part in the substantive part of the debate, with State Secretary András Tállai appearing on behalf of the government itself.
Analysts believe that the changes made to the KATA tax scheme will essentially mean its demise, as it will be useless for most sole proprietors if they cannot have businesses as clients. In addition, the new law will come into force on September 1, giving entrepreneurs an extremely short period time to make a transition to a new tax structure.
Demonstrations of several hundred people took place in several locations in Budapest and Debrecen while the parliamentary debate on the law took place on Tuesday.