Simplification of tax reporting obligations for employers in Hungary
The Commission provided technical support to the Hungarian Ministry of Finance and National Tax
and Customs Administration (NTCA) for simplifying the reporting obligations of employers through
design and implementation of a single channel for submitting the data in real time. The project
involved the efforts of a number of stakeholders such as Hungarian State Treasury, the National
Health Insurance Fund, the Central Statistical Office, the Ministry of Interior, the Ministry of
Innovation and Technology, the Hungarian National Authority for Data Protection and Freedom of
Information and the National Info Communication and Information Technology Council.
The Hungarian government is committed to continue the transformation of public service provision
procedures into a direction, which promotes voluntary compliance, and rapidly detects or prevents
non-compliance. Administration related to employment – an area characterised by considerable
administrative costs – is a topic where this approach seems both feasible and potentially rewarding.
Currently enterprises in Hungary are obliged to report large quantities of data through various
channels in different formats to different public institutions. This situation creates heavy
administrative burden for both taxpayers and public institutions, and involves problems such as:
- unnecessary duplication of data;
- unsynchronised reporting periods and reporting deadlines;
- various degrees of data cleansing and quality control procedures;
- discrepancies in terminologies and methodologies which require considerable crosschecking and data verification
The design and implementation of modern information technologies and solutions could allow for a
significant change in the approach.
The provided technical support addressed the needs of Hungary to design and prepare for
implementation a new simplified single-channel approach for providing of data by employers. This
approach aimed at consolidating the requirements of the different public institutions and reducing
the administrative burden for all parties involved in the process. Furthermore, the project specified
the architecture and the requirements for a new IT solution based on state-of-the-art information
technologies to facilitate the provision of data by employers. The project significantly accelerated
the preparation of the reform by preparing a comprehensive consolidated description of the data
(data dictionary) requested from employers.
This project produced the following deliverables:
- Technical report on the single-channel provision of data by employers, which included an analysis of the current situation in regard with the reporting obligation and data provision by the employers in Hungary, benchmarking research on best international practice, proposal for a new model for provision of data by employers, feasibility study on technological solutions including block-chain technology, gap analysis, transition plan, and business case for the costs of the reform.
- Technical report specifying the architecture and the functional, non-functional, and technical requirements, including system integration, interfaces, data migration, IT security and data protection requirements for the new IT, and a detailed plan for IT development and implementation of the new IT solution.
- Consolidated data dictionary describing all data elements currently provided by employers and the desired future data requirements
Provided that the proposals and recommendations will be incorporated as part of the Hungary’s
institutional and operational framework, the deliverables are expected to result in the following
- Adoption and implementation of a new simplified single-channel approach for providing data by employers.
- Implementation of state-of-the-art information technologies to facilitate the provision of data by employers through a single channel.
- Accelerated preparation of the reform by collecting information from all stakeholders of the contract and creating a consolidated data dictionary.
Although subject to other contributing factors, the tasks and deliverables of the contract and the
associated outcomes should help Hungary to: (1) to improve public service provision procedures that
promote voluntary compliance and significantly reduce the administrative burden to both -
institutions and businesses; (2) to ensure high level performance, stability and data security; (3) to
increase the revenue collection and compliance, and (4) improve the business environment in