DRAFT AMENDMENTS TO THE TAX LEGISLATION 2015

DRAFT AMENDMENTS TO THE TAX LEGISLATION 2015 TABLE OF CONTENTS CORPORATE INCOME TAX... 2 New alternatives for supporting the film industry, performer organizations and team sports (tax credit for donation)... 2 The rules governing tax loss carry forward are getting stricter... 2 Other corporate income tax base adjustments... 3 Related parties... 3 R&D activities (IP office resolution necessary)... 3 Definition of permanent establishment... 3 Determination of arm s length price... 3 Minimum income... 3 PERSONAL INCOME TAX... 3 Family tax base reducing allowance... 3 First-married tax allowance... 3 In-kind benefits... 4 Insurance allowance... 4 Changes to pension insurance regime... 4 Declarations pertaining to tax advances... 4 Allowances related to housing... 4 SURTAX TO ENHANCE THE BALANCE OF STATE BUDGET... 4 Tax liability of collective investment forms... 4 Surtax of financial organizations and credit institutions... 4 ENERGY TAX... 5 REGISTRATION TAX... 5 EXCISE DUTY... 5 Tax rate of alcohol products... 5 Tax rate of fuels... 5 THE RATE OF EXCISE GUARANTEE... 5 VALUE ADDED TAX... 5 Due date of successive invoices... 5 Determination of tax payable in the case of in-kind advance payment... 5 Tax relief related to portfolio management... 5 The amount of input tax for the acquisition of gasoline... 6 The deadline of issuing the invoice automatic equipment without operator... 6 Domestic recapitulative statement... 6 Frequency of tax returns... 6 LOCAL TAX... 6 The possibility of introducing municipal tax... 6 Determination of consolidated local business tax base of related parties... 6 INNOVATION CONTRIBUTION... 6 INCOME TAX OF POWER SUPPLIERS... 6 Obligation for completion... 6 PUBLIC HEALTH PRODUCT TAX... 7 TELECOMMUNICATION TAX... 7 Tax liability for internet providers... 7 Telecommunication tax allowance... 7 Tax assessment, declaration and payment... 7 ADVERTISMENT TAX... 7 The amount of tax... 7 Tax liability of taxpayers for 2015 who are applying a business year different from the calendar year in 2014... 7 TRANSFER TAX... 7 Definition of real property holding companies... 7 Payment of transfer tax by bank transfer in administrative proceedings... 7 TAX PROCEDURE... 7 Basic principles... 7 Declarations... 8 Registration exemption to taxpayer engaged in supply of goods under tax warehousing procedure... 8 Reporting of automatic equipment... 8 Reporting of road transport... 8 Tax audit... 8 Amendments related to cooperation in tax matters... 8 SOCIAL SECURITY... 9 Family social security allowance... 9 Healthcare services contribution... 9 ACCOUNTING... 9 Definitions... 9 FX rates... 9 Demonstration of own equity... 9 Additional capital contribution in-kind... 9 Sale of business... 9 Price discount... 9 Repeated audit... 9 Other amendments... 10 ENVIRONMENTAL PROTECTION PRODUCT CHARGE10 Products subject to EPPC... 10 Flat tax... 10 In-kind contribution, merger, business transfer... 10 TAX LAW CHANGES 2015 04. November 2014

CORPORATE INCOME TAX New alternatives for supporting the film industry, performer organizations and team sports (tax credit for donation) The introduction of a new donation system for the film industry, performer organizations and team sports is an important change in the 2015 draft corporate income tax amendments. The essence of this new system is that the taxpayer issues a statement about the donation of a certain percentage of its tax or tax advance to the selected beneficiary. The statement should be made on the official online form of the tax authority, with a declaration of the exact scope and the indication of the name and tax registration number of the beneficiary. The donation should be made: in an amount of up to 50% of the corporate income tax advance, by the last day of the month prior to the final deadline for the payment of the corporate income tax advance; by the deadline for filing the corporate income tax advance supplement return; and by the deadline for filing the corporate income tax return. The sum of the donation in points b) and c) together with the sum offered from the tax advance cannot exceed 80% of the total amount of tax payable (reduced after tax allowances). The declaration is valid if: at the time of issuing the donation declaration or modifying the declaration, the taxpayer does not have more than HUF 100,000 of executable debt recorded by the tax authority; and the taxpayer attaches a declaration by the professional organization or, in the case of donating to team sports, the approval authority of the sport-development programme that the contribution does not exceed the maximum amount of donation the beneficiary is entitled to receive. The approval authority decides on the above by taking into account other film, sport and cultural contributions made to the beneficiary. Based on the declaration, the tax authority records tax credit for the taxpayer pertaining to the contribution transferred to the beneficiary. The amount of the tax credit is: 7.5% in the case of declarations made regarding the tax advance and tax advance supplement; and 2.5% in the case of declarations made regarding tax when filing the tax return. The benefit of the new regime is that the amount of donation will no longer affect negatively the EBIT of the company since it will qualify as tax payable instead of extraordinary expense. The rules governing tax loss carry forward are getting stricter According to the draft amendments, losses realized in the tax year 2015 and thereafter can only be utilized in the following five tax years. The draft legislation provides stricter rules for the utilization of tax losses upon mergers and acquisitions. Mergers, de-mergers: the legal successor, if it is entitled to utilize the loss of the predecessor in line with the effective provisions, can use tax losses annually up to a ratio of what the revenue of the continued activity (i.e. after the merger or de-merger) represents to the average revenue of the same activity carried out by the predecessor in the previous three tax years (i.e. before the merger or demerger). Acquisitions: in the case of company acquisition, the company is entitled to utilize tax losses in the ratio of what the revenue from continuing the activity carried out before the acquisition represents to the average revenue of the same activity carried out in the previous three tax years. According to the temporary provisions: Tax losses generated by the last day of the 2014 tax year and which has not yet been utilized can be utilized in line with the provisions in force when the loss was realized. Taxpayers whose tax year is different from the calendar year are entitled to utilize the tax losses arising in the tax year started in 2014 in line with the provisions in force on 31 December 2014. Any tax losses realized by 31 December 2014 can only be utilized until the tax year that includes 31 December 2025. 2 TAX LAW CHANGES 2015

Other corporate income tax base adjustments The support of higher education institutions The draft legislation entitles the taxpayer (based on the certification of the beneficiary) to reduce its tax base with 50% of the contribution if an agreement is made for the establishment or support of the operation of the institution with the founder or operator for at least for five years. Depreciation The draft amendments make it possible to utilize an annual 10% depreciation of goodwill if its recording is not abusive, which also have to be declared in the tax return. Missing assets The book value (tax value of intangible assets or tangible assets) of a missing asset does not qualify as deductible expense pertaining to the business activity of the company if both of the following two conditions are met: the shortage would not have occurred if due care had been taken by the company (considering the value, characteristics of the asset, circumstances of the storage); and the taxpayer, taking into account the requirements of reasonable conduct of business, did not exhaust every option for reducing losses arising from the shortage. Related parties The taxpayer and other entities qualify as related parties if there is joint management that exercises decisive influence with respect to business and financial policies. R&D activities (IP office resolution necessary) The precondition of reducing pre-tax profits by the direct cost of R&D activities from 2015 (even if incurred by a related party) is that the competent authority (Hungarian Intellectual Property Office) classifies the activity as R&D activity. Definition of permanent establishment The draft legislation amends the definition of permanent establishment such that foreign entities engaged in the utilization of real estate do not qualify as permanent establishments if they are real estate investment trusts founded in the EEA and are not subject to profit tax similar to corporate income tax in their country of foundation. Determination of arm s length price In the case of determining the arm s length price, if, according to the chosen method, the middle range (interquartile range) is the arm s length price, further narrowing of the comparable set should be executed where appropriate. Minimum income When determining minimum income, the total income cannot be reduced by the amount of the cost of goods sold (COGS) and the value of intermediated services. This especially negatively affects companies engaged in commercial activities. PERSONAL INCOME TAX Family tax base reducing allowance According to the draft legislation, the family tax allowance after two children will be doubled in four years from 2016. The family tax allowance will increase by HUF 15,625 annually from 2016 to 2019 after each dependent, and it will reach HUF 125,000 by 2019. This results in HUF 2,500 of tax savings monthly after each dependent in 2016, and HUF 10,000 in 2019. First-married tax allowance Taxpayers who marry after 31 December 2014 for the first time (the first marriage of at least one of the spouses) can reduce their tax base by HUF 31,250 per month (which equates to HUF 5,000 in tax) in the following 24 months after marrying. The first-married tax allowance can be utilized until the month after which the spouses are entitled to family tax allowance with regard to a fetus or child (excluding a foster child). TAX LAW CHANGES 2015 3

In-kind benefits The draft amendments significantly modify the taxation of benefits subject to payer taxation, setting up the following three categories in terms of payable tax: The taxation of certain benefits remains unchanged (e.g. representation, business gift, low value gift, office or other business-related meals or other services, telephone and personal insurance fee). Such benefits are taxed with a rate of 16% personal income tax and 27% healthcare contribution. The tax base is 1.19 times the value of the benefit. The in-kind benefits are taxed with a rate of 16% personal income tax and 27% healthcare contribution instead of the current 16% personal income tax and 14% healthcare contribution. The tax base is 1.19 times the value of the benefit. The tax base is 1.53 times the value of the benefit of that part of the in-kind benefit which exceeds the HUF 450,000 annual amount or otherwise exceeds the statutory limit. This rule also applies to certain benefits provided to employees and close relatives. A sum of 16% personal income tax and a 27% healthcare contribution are payable. Insurance allowance The draft amendments modify the taxation of whole life insurances (WL). These insurances would fall under the same tax treatment as savings insurances from 2018. The fee of these insurances will no longer be taxfree from 2018. The previously tax-free fees will be taxed as other income, while the income from insurance agreements concluded from 2018 will be taxed according to the taxation regime as interest income under the general rules. Changes to pension insurance regime The draft amendment modifies the rules of pension insurance, making it more flexible and introducing a couple of clarifying changes. Declarations pertaining to tax advances According to the draft amendments, private individuals can also provide the payer of a regular income with a declaration on applying the family and personal allowances from the tax advance; furthermore, it allows the application of the first married tax allowance when calculating the corresponding tax advance. Allowances related to housing The draft amendments supplement the provision which declares that no income from interest allowance should be realized if the employer provides housing loans for its employee, under the conditions established by law. SURTAX TO ENHANCE THE BALANCE OF STATE BUDGET Tax liability of collective investment forms Based on the legislation in force, tax liability concerning collective investment forms [i.e. alternative investment funds (AIF) and undertakings for collective investment in transferable securities (UCITS)] arises exclusively at the level of investors. The draft amendment introduces the surtax liability of the collective investment form itself. Liable to tax are those collective investment forms where the fund units are distributed by a distributor with a seat or a branch office in Hungary. The tax base is the distribution fee and the tax rate is 25%. At the same time, the surtax liability of investment fund managers has been terminated. Surtax of financial organizations and credit institutions The surtax of financial organizations and credit institutions remains in force as established in 2014 except for investment funds. The draft amendment, under certain conditions, allows the surtax liability to be reduced by impairment (and extraordinary depreciation) accounted for in 2014 on shareholdings up to the amount of HUF 5 billion. In the case of write-back of impairment (or write-back of extraordinary depreciation), the financial organization has to increase its surtax liability proportionally in the tax year following the tax year of the write-back. 4 TAX LAW CHANGES 2015

ENERGY TAX According to the draft amendment, the tax rate changes as follows: For electricity, it increases from HUF 295 to HUF 300 per megawatt hour (MHW). For natural gas, it increases from HUF 88.50 to HUF 93.50 per gigajoule. For carbon, it increases from HUF 2,390 to HUF 2,516 per ton. If the purchaser of energy not subject to energy tax uses such energy for own purposes, tax liability arises at the time of use and not on the date of supply as defined by the VAT Act. In certain cases, even the purchaser of non-taxed energy can deduct/reclaim tax up to the amount of the declared tax. REGISTRATION TAX For fleet operators, it would be enough to own (or hold as operator) 50 vehicles in order to obtain the fleet operator status. Only third country resident companies will need to authorize a financial representative or operator in Hungary. EXCISE DUTY Tax rate of alcohol products The current tax rate for alcohol products produced in a distillery from the consumer s own material is 0% for up to 50 liters. The zero rate is modified to HUF 1,670 per liters per consumer, furthermore the tax rate for privately manufactured distillate changes from zero to HUF 1,000 flat rate for up to 50 liters (if the purpose of manufacturing was private consumption). Tax rate of fuels The amendment levies a HUF 95,800 per ton tax rate on fuel-purpose natural liquid gas instead of the current zero rate (if it is sold, imported or used as fuel for road vehicles). Similarly, the tax rate for compressed gaseous hydrocarbon is HUF 28 per cubic meter. The tax rate for certain heating oils is also increasing. The rate of excise guarantee The holder of the excise duty license has to provide an excise guarantee of HUF 600 million for petroleum products, HUF 22 million for tobacco products and HUF 150 million for other excise products, instead of the current HUF 120 million for petroleum products and HUF 22 million for other excise products. petroleum products and HUF 22 million for other excise products. VALUE ADDED TAX Due date of successive invoices In the case of successive invoices (i.e. where the parties establish settlement periods or where the consideration for the supply is established periodically), the taxable event is the last day of the settlement period. This provision is enforceable for settlement periods starting from 31 December 2015 (when the due date for the payment is also after 31 December 2015). In the case of accounting, auditing and tax consultancy services, the provision is enforceable for settlement periods starting from 30 June 2015 (when the due date for the payment is also after 30 June 2015). There are exceptions to the new rule, as follows: If the invoice or the receipt was issued before the last day of the settlement period, the settlement date is the date of issuance of the invoice; furthermore If the due date for the payment of consideration follows the last day of the settlement period, the chargeable event is the due date but the 30 th day from the last day of the settlement period the latest. Determination of tax payable in the case of in-kind advance payment The draft legislation regulates the case where the advance payment is provided in-kind or in the form of cash equivalent instruments. In this case, the taxable event is the time of the acquisition of the in-kind instrument. Tax relief related to portfolio management From 1 January 2015, in line with the decision of ECJ in case no. C-44/11, the portfolio management qualifies as VATable supply. The modification enters into force on 1 January 2015, which means that in the case of continuous service, the tax liability is enforceable with respect to the fees payable starting after 31 December 2014. TAX LAW CHANGES 2015 5

The amount of input tax for the acquisition of gasoline According to the amendment, input VAT for the acquisition of gasoline is deductible when the gasoline is used directly as a material expense and incorporated in the tax base of another supply of goods. The deadline of issuing the invoice automatic equipment without operator In the case of selling products or providing services via automatic equipment without an operator, there is an obligation to issue an invoice with respect to selling goods or providing services to other taxpayers. If the equivalent (including advance) is paid in cash or in equivalent cashsettled instruments, the taxpayer must issue an invoice within 15 days from the settlement. Domestic recapitulative statement In the case of domestic supply of goods or services both, the supplier of goods/services and their customers are obliged to submit domestic recapitulative statements if the amount of VAT charged reaches or exceeds HUF 1 million instead of the current HUF 2 million threshold. Taxpayers may opt to prepare domestic recapitulative statements regardless of the HUF 1 million threshold. According to the new regulation, in certain cases, if the amount of VAT charged reaches or exceeds HUF 1 million, the supplier of goods/services is obliged to indicate the first eight characters of its customer s VAT number (VAT group ID number) on the invoice. As a transitional rule, invoices issued in 2014 with a date of supply in 2015 entitle taxpayers to VAT deduction without having this information indicated on the invoice. Frequency of tax returns The taxpayer which was established during the tax year without a predecessor is obliged to file monthly general tax returns (until the last day of the year after the establishment). The taxpayer which is obliged to prepare monthly tax returns must switch to quarterly tax returns if in the second year before the tax year in question the value of products sold or services provided was higher than HUF 50 million. This modification is in connection with the amendment which declares that besides the sum of the deductible VAT the value of products sold or services provided must not exceed HUF 50 million in order to be entitled to file annual tax returns. LOCAL TAX The possibility of introducing municipal tax The draft amendments authorize local municipalities to introduce municipal taxes with regard to any taxable item which is not taxed by statutory provisions and the introduction of such tax is not prohibited by law. Determination of consolidated local business tax base of related parties Where determining the consolidated tax base for local business tax purposes, if the related party status does not exist during the course of the whole tax year, the data should be taken into consideration only for the period of the existence of the related party status (with daily proportion). INNOVATION CONTRIBUTION The obligation for the payment of contribution is affected by the proposed provision of the Act on local business tax which regulates the tax base consolidation of related parties. INCOME TAX OF POWER SUPPLIERS Obligation for completion According to the draft amendments, the tax advance has to be supplemented to the sum of the expected tax (not to 90%) until the 20 th day of the last month of the tax year, although the penalty is calculated based on the 90% rule. The taxpayer is already entitled to apply the new provision for the tax year 2014, with regard to the fact that the rules for corporate income tax return for 2013 prescribed the declaration of the income tax advance of power suppliers. Based on the foregoing, it is in the taxpayer s best interest to apply the rules of completion, since according to the provisions in force, tax advance is not attributable into the tax liability. 6 TAX LAW CHANGES 2015

PUBLIC HEALTH PRODUCT TAX Alcoholic drinks will be subject to public health product tax. The amount of the tax will range from HUF 20 to HUF 900 depending on the alcohol by volume. According to the draft amendments, products with at least 20% honey content and with no more than 40% sugar content will not be subject to the above tax. TELECOMMUNICATION TAX Tax liability for internet providers The amendment includes the taxation of telephone services and internet services. The tax basis is the amount of the data downloaded by the customer or user defined by the Act on Telecommunication (the natural person, legal person or other organization that uses or requires the services) and the tax rate is HUF 150 per gigabyte. Telecommunication tax allowance The monthly tax is deductible by the one-twelfth part of the corporate income tax submitted and paid (in the case of a tax return in a tax year shorter than 12 months, annualized with daily proportion) in the tax return which was finally filed before the month of the tax assessment. Tax assessment, declaration and payment The service provider is obliged to declare and pay the tax monthly on the official form of the tax authority by the 20 th day of the second month after the call, the text message or the download of data. ADVERTISMENT TAX The amount of tax The draft legislation makes it possible to assess the amount of tax due in proportion to calendar days where the tax year is shorter than 12 months. Regarding consolidation of tax base, related parties are required to take into consideration tax bases in an amount proportional to the number of those days when the related party status existed. Tax liability of taxpayers for 2015 who are applying a business year different from the calendar year in 2014 The draft legislation introduces a special computation method for those taxpayers established before 1 January 2015 if their tax year is different from the calendar year These taxpayers shall observe the figures of a temporary tax year from 1 January 2015 to the last day of their business year when computing the tax base and the tax payable for this period (). This provision is not applicable for taxpayers established after 15 August 2014. For the temporary period, the tax base is the amount proportional to the period between 15 August 2014 and 31 December 2014. The tax advance should be assessed and declared until 15 January 2015 and be paid in two equal parts on 15 January 2015 and on the last day of the temporary tax year. TRANSFER TAX Definition of real property holding companies The definition for real property holding companies slightly changes. Payment of transfer tax by bank transfer in administrative proceedings Besides the main rule, which prescribes that the duty has to be paid in the form of stamps, it will also be possible for the client to choose bank transfer. TAX PROCEDURE Basic principles The draft amendments declare that the tax authority is not entitled to categorize a legal relationship differently during the audit of a party concerned if the relationship was already inspected and categorized in the case of another party to the same relationship. The draft legislation expressly extends the general anti-abuse principle to international taxation situations where the different legal categorization by the states involved results in nil taxation. TAX LAW CHANGES 2015 7

Declarations Registration exemption to taxpayer engaged in supply of goods under tax warehousing procedure The draft amendments exempt from the Hungarian registration obligation those Community taxpayers who are exclusively engaged in the intra-community supply of goods under tax warehousing procedure prescribed by the VAT Act. In order to use this provision, the Community taxpayer is required to authorize the operator of the tax warehouse to use the tax relief. Reporting of automatic equipment In line with the modification of VAT regulations, the reporting of automatic equipment selling food products is introduced as a new reporting obligation. The reporting of the start or termination of selling and the reporting of certain data have to be done electronically in addition to the payment of service fees. Taxpayers operating automatic equipment on 1 January 2015 shall fulfil the reporting obligation by 31 March 2015. Reporting of road transport The draft legislation introduces the reporting obligation for the road transport of products in order to determine the Electronic Road Transport Control System-number (ERTCS-number). Starting from 1 January 2015: (i) intra-community supply from an EU member state to Hungary or importation for other purposes, (ii) intra-community supply from Hungary to an EU member state or exportation for other purposes and (iii) the first taxable domestic supply of goods for a taxpayer which are transported on road with a vehicle subject to road toll; or on road with a vehicle not subject to road toll if the goods qualify as risky food products (exceeding certain thresholds) or as other risky products. can only be carried out by taxpayers with an ERTCS-number. Tax audit If the tax authority contacts a foreign tax authority in the course of a tax audit in the future, it is entitled to close the audit after 180 days of suspension instead of the previous one year. The tax authority will be entitled to consult telecommunication service providers in order to clarify the facts in connection with the supply of e-commerce services. Amendments related to cooperation in tax matters The draft amendments contain several rules related to the implementation of the Directive on administrative cooperation in the field of taxation. E.g. with respect to persons resident in another EU member state for tax purposes, employers and other payors will have a data reporting obligation (i) on the amount of salary paid to such persons as executive officers, (ii) on any insurance payments as regards life insurance contracts and (iii) on the provision of certain real estate related income. Binding ruling The draft legislation introduces several amendments regarding binding rulings: The binding force of a binding ruling ceases based on substantive changes in any obligations arising out of international law. The draft legislation restricts the temporal binding force of the ruling. Accordingly, the ruling would be binding up to the end of the fifth tax year after it has been issued. The binding force can be extended once with an additional two years (provided that no legislative changes, changes in obligations arising out of international law and changes in the facts occurred). This provision applies also for the ruling already issued; however, the start date of the binding force is to be calculated from 1 January 2015. As a new possibility, the determination of the method of pro rata VAT calculation can be requested. Rules pertaining to binding rulings apply accordingly to such proceedings. 8 TAX LAW CHANGES 2015

In the case of periodic supplies, binding rulings can only be issued with respect to the VAT obligation. The general deadline for issuing the binding ruling changes from 75 to 90 days, whereas the deadline in accelerated proceedings changes from 45 to 60 days. The fee for initial consultation changes from HUF 100,000 to HUF 500,000. Other amendments Annual VAT returns can be submitted only by those taxpayers where the net amount of goods sold and services supplied does not exceed HUF 50 million on an annual basis. The definition of tax shortage is modified as to explicitly exclude the difference of a negative VAT balance carried forward. In the future, auditors will be entitled to representation in tax proceedings in their own name. Social security Family social security allowance The payer of a regular income (qualifying as part of the aggregated tax base), in addition to the employer, must also consider the family social security allowance. Healthcare services contribution From 1 January 2015, the monthly amount of the healthcare services contribution increases to HUF 6,930 (daily fee of HUF 231). ACCOUNTING Definitions The figures in the closed financial reports, affected by amendments made to already concluded agreements, must be modified in line with the rules of revision process. The draft legislation introduces the definition of financial lease provided by the Financial Institutions Act for accounting purposes as well. FX rates The draft legislation provides that the official FX rates of the Hungarian Central Bank apply in each case where the entrepreneur s reporting currency is other than HUF and some limits or thresholds must be considered pursuant to the accounting legislation. Demonstration of own equity As a general rule, the last balance sheet or interim balance sheet can be used to demonstrate the own equity of the company for six months from the balance sheet date. Additional capital contribution in-kind The draft legislation provides the following rules in connection with in-kind additional capital contribution and its repayment: When repaying in-kind the previous additional capital contribution, the rules on sale of assets apply accordingly and the receivable recorded reduces the tied-up reserves. When making an additional capital contribution to the tied-up reserves, the rules on the sale of assets are to be followed, as well and the retained earnings should be reduced with the amount of the receivable. The settlement day is the day when the asset is handed over. The acquisition value of the assets acquired as a result of an additional capital contribution is the value determined in the founder s resolution. Sale of business Pursuant to the draft legislation, where the consideration for the transfer of business exceeds the market value of the assets (less the liabilities), the difference (that is recorded as goodwill at the transferee) is to be booked as net sales revenue by the transferor. Price discount In connection with the rules of the VAT Act on indirect cash refunds (i.e. where cash is refunded to the customer by the seller s seller instead of the direct seller), the amount of discount would be accounted as other revenue and other expense instead of extraordinary revenue and extraordinary expense. Repeated audit If the legislation makes the withdrawal of the (simplified/consolidated) financial report possible or obligatory, then the entrepreneur must arrange the repeated audit within 90 days. TAX LAW CHANGES 2015 9

Other amendments Balance sheets of merging entities change such that profit should be transferred to retained earnings. Pursuant to the rules of the new Civil Code, the liability to pay late interest arises on the day of the missing payment deadline by the force of law. Accordingly, late interest must be recorded as a liability instead of accrued expense. In line with IFRS standards, the treatment of transportation costs will be the same in respect of domestic routes as well as transportation routes abroad (i.e. transportation made from the border to the destination abroad will no longer reduce the export sales revenue). ENVIRONMENTAL PROTECTION PRODUCT CHARGE Products subject to EPPC The scope of products which are subject to EPPC is extended with the following: KEY CONTACTS Levente Torma Telephone: +36 1 225 1033 E-mail: levente.torma@btpartners.hu Ákos Becher Telephone: +36 1 225 1033 E-mail: akos.becher@btpartners.hu Pálné Pölöskei Telephone: +36 1 225 1033 E-mail: palne.poloskei@btpartners.hu B&T Tax Solutions Zrt. Becher & Torma Law Firm H-1123 Budapest, Alkotás u. 53., MOM Park Irodaház, F. épület 4. emelet Telephone: +36 1 225 1033 Fax: +36 1 225 1034 10. TAX LAW AMENDMENTS I 2014, other plastic products (e.g. plastic flowers); other chemical products (e.g. soap and cosmetics); and paper used in offices. The scope of taxable packaging materials and electronic equipment is extended, as well. Flat tax In the case of the three types of products that become subject to EPPC as a result of this draft legislation, a flat tax is introduced for taxpayers of low emission. The flat tax is HUF 4,000 per year in respect of all three types of products. In addition, the flat tax for paper used for advertisement purposes increases to HUF 8,000. Taxpayers of low emission are those who release, use for own purposes or build a stock of less than 2 kg of plastic and 200 kg of chemical products or paper per year. In-kind contribution, merger, business transfer Pursuant to the draft legislation, in-kind contributions, legal transformations (e.g. mergers) and business transfers which are outside the scope of VAT will not result in tax payment liability. 10 TAX LAW CHANGES 2015