The Revolutionary Digitalization of Taxation in Hungary

Abstract

In my research, I deal with the revolutionary digitalization of the Hungarian tax system, which poses new challenges to the tax office, taxpayers and their support service providers. The topicality of my choice of topic is given by the fact that version 3.0 of National Tax and Customs Office’s (NTCA) latest „miracle weapon”, the Online Invoice System, was introduced during my research period, and it was announced that a draft VAT return will be offered to taxpayers. They are the culmination of a decade-long process. The 21st century has brought new challenges with the development of science and technology, which have fundamentally reshaped our lives, economies and taxation. And the new challenges have also brought about new expressions in our everyday lives. In connection with the digitalization of accounting, taxation and bookkeeping, this process can best be illustrated by performing previously paper-based bookkeeping, invoicing, filling in tax returns, and tax audits using software or automation. The Hungarian tax authority has been dictating an extraordinary pace of digital innovation in the last decade, which has accelerated even more in recent years, and since July 2018, a real digital revolution has begun in the Hungarian tax system. This is because in recent years the tax authority has fundamentally changed its relationship with taxpayers by fulfilling the obligation to provide immediate information. The immediate analysis of this incoming data has made the selection process for audits more efficient. As a research question, I examine what digitalization systems the Hungarian tax authority has introduced in Hungarian taxation, for what purposes they have done so, and whether they have achieved or are expected to achieve their objectives. I study especially the latest digitalisation development of the Hungarian tax authority, the Online Invoice System, and I review why the public mentions it as NTCA’s latest „miracle weapon”. I also examine what further digitalisation efforts are expected in taxation in Hungary in the future.