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ACT CXXI OF 2000 ON THE AMENDMENT OF ACT CXXVI OF 1996 ON THE USE OF A SPECIFIED PORTION OF PERSONAL INCOME TAX ACCORDING TO THE DESIGNATION OF THE TAXPAYER (unofficial translation)

The Parliament enacts the following act on the amendment of Act CXXVI of 1996 on the Use of a Specified Portion of Personal Income Tax According to the Designation of the Taxpayer (hereinafter: 1% Act):

§ 1 Paragraphs (1)-(2) of §1 of the 1% Act shall be replaced by the following provisions:

"(1) With due consideration of §45 of the PIT Act as well, in the application of this Act, the amount remained after deductions from the amount of the consolidated tax base as stated in the individual’s tax return, or in the employer’s account made in lieu of a tax return shall be regarded as tax paid, provided, that the individual has paid this tax prior to the deadline for submitting the tax return, or upon request before the day of maturity tax authorities have granted him/her a postponement of payment, or a benefit of a maximum 12 months-deferred payment, and the private individual has fully paid the tax and the late fee entirely in compliance with the resolution on permission.

(2) Private individuals may designate in separate statements

a) one percent of their tax paid to a beneficiary selected from those determined in §4,

b) and an additional one percent of their tax paid to a beneficiary selected from those determined in § 4/A."

§ 2 §3 of the 1% Act shall be replaced by the following provision:

"§3 On the basis of the valid designation statement attached to the tax return (the employer's account made in lieu of the tax return) and the relevant data of the tax return (or the employer’s account made in lieu of the tax return) of the private individual the Office for Taxation and Financial Control (hereinafter: OTFC) transfers the amount determined in accordance with the provisions of § 1 to the beneficiaries mentioned by §4. The amount determined in accordance with the above provisions is transferred by the Ministry of National Cultural Heritage to the church beneficiaries determined by paragraph (1) of § 4/a)and by the organ supervising the chapter responsible for the use of the advanced purpose to the budgetary purpose determined by paragraph 2 of §4/A."

§ 3 (1) Paragraph (1) of §4 of the 1% Act shall be replaced by the following provision:

"(1) In the application of this Act, beneficiaries are

a) those civil society organizations (with the exception of political parties and interest groups of employers or employees) described in Act II of 1989 on the Right of Association, and

b) those foundations, which have been registered by the court at least three years prior to the first day of the year of the private individual’s designation statement, and which effectively pursue an activity determined in clause c, of §26 of the Act on Public Benefit Organizations according to their statutes, or founding documents at least one year prior to the first day of the designation statement mentioned;

c) public foundations, provided that they pursue activities enumerated in clause b) of paragraph (1) of this § according to their founding documents;

d) the Hungarian Academy of Sciences;

e) the Basic Program for the Development of Higher Education;

f) national public collections enumerated by Appendix No. 2 and 3 of Act CXL of 1997 on the Protection of Cultural Objects and the Museums, the Public Library Services and the Public Education, and other cultural institutions listed below:

1. the Hungarian State Opera,

2. the National Theatre,

3. the Hungarian National Archive,

4. the National Széchenyi Library,

5. the Hungarian Film Archive,

6. János Neumann Multimedia Center and Digital Library;

g) specialized museums collecting nationwide;

h) those organizations performing library, museum, or other cultural and other entertaining activities which have received an individual support from a local government, a national or local minority government, or from the central budget in any of the three years prior to the first day of the year of the designation statement, and not belonging to any of the previous categories;

i) the reconstruction program of Budapest Sports Hall administered by the National Stadium and its Institutions Central Training Camp."

(2) Clause d, of paragraph (2) of §4 of the 1% Act shall be replaced by the following provision:

[From those indicated in clauses b and c of paragraph (1) only that organization may be a beneficiary, which]

"d) declares, that it has no public debts due,"

(3) Paragraph (3) of §4 of the 1% Act shall be replaced by the following provision:

"(3) Irrespective of the provisions of clause d, of paragraph (2), from those organizations indicated in clauses a)b) and c, of paragraph (1), and in addition of paragraph (4) that one may also be a beneficiary - if it otherwise complies with the provisions of paragraph (2) - which consents to pay its public debts from the amount to which it is entitled on the basis of this Act, and indicates precisely the addressees and the order of paying the debts. In this latter case, tax authorities inform the beneficiaries in a letter about the paying of public debts in accordance with paragraph (4) of §32 of Act XCI of 1990 on the Order of Taxation."

(4) §4 of the 1% Act shall be supplemented by the following new paragraph (4):

"(4) Tax amounts offered to beneficiaries terminated by a legal successor concern the legal successor of the beneficiary in case of fulfilling the requirements prescribed by paragraphs (2)-(3) of §4."

§ 4 Paragraphs (1)-(2) of §4/A of the 1% Act shall be replaced by the following provisions:

"(1) In the application of this Act, beneficiaries are the following:

a)churches, religious denominations, or religious communities described in Act IV of 1990 on Freedom of Conscience, Religion and Churches (hereinafter: churches) – not including organizational units and institutions of churches -, if OTFC has provided a technical number to them in accordance with paragraph (2) of §4/A;

b) advanced purposes determined by the Parliament in the Act on Budget relating to the year of the designation statement.

(2) Upon the request of churches claiming the designation statements of private individuals, the OTFC provides technical numbers to them, if they authentically certify that the competent court registered them as churches prior to the first day of the designation statement. If OTFC refuses to provide a technical number, the church may initiate the judicial revision of the resolution within 15 days. The competent court decides on annulment within 15 days in an extra judicial procedure."

§ 5 (1) Paragraph (1) of §5 of the 1% Act shall be replaced by the following provision:

"(1) Private individuals may make designation statement(s) by filling out a form introduced by OTFC (or a sheet of paper of the same size and information on it) and placing it into a postal standard size envelope, sealing the envelope and writing their names, addresses and tax identification codes on it. The tax number of the beneficiaries (or the technical number in case of those mentioned in §4/A) must be indicated, and in addition, the name of the beneficiaries may be indicated on the designation statement(s). Private individuals place the envelope containing the designation statement(s) in their tax return package, or – in the event of tax reporting by the employer in lieu of a tax return – give it directly to their employers no later than March 25th of the year following the tax year."

(2) Paragraph (6) of §5 of the 1% Act shall be replaced by the following provision:

"(6) On the basis of the designation statements attached to the tax returns of private individuals or the employer's accounts made in lieu of a tax return, through September 1st of every year tax authorities instruct the beneficiaries described in paragraph (1) of § 4 to fulfill the requirements determined in paragraphs (2)-(3) of §4 within 30 days. In case of neglect this deadline, the provisions of §40 of Act IV of 1957 on the General Rules of Administrative Procedure are applicable."

§ 6 (1) Paragraphs (1)-(5) of §6 of the 1% Act shall be replaced by the following provisions:

"(1) OTFC transfers the amount mentioned in §3 to the beneficiaries described in paragraph (1) of §4

a) within 30 days after filing the statements prescribed in paragraph (2) of §4, but through November 30th of the year of the designation statement at latest – with regard to paragraph (6) of §5 as well - , and

b) in the case of paragraph (3) of §4 after deducting public debts.

(2) OTFC transfers the public debts described in clause b) of paragraph (1) to the addressees indicated by the beneficiary in the order indicated.

(3) Beneficiaries described in paragraph (1) of §4 must publish the data on the targeted use of the amounts transferred on the basis of this Act – determining the fact and amount of possible reserved support - in a press release through October 31st of the calendar year following the transfer. In order to certify publication, the rules governing the storing of taxation certificates must be applied for one original copy of the press release.

(4) Through August 31st of the year of the designation statement the president of OTFC informs the Ministry of Finance, and in addition, the Prime Minister’s Office and the Ministry of National Cultural Heritage on the basis of the valid designation statements made in accordance with the provisions of paragraph (2) of §1

a) about the beneficiaries enumerated (summarized by categorizes) by clauses a,-j, of paragraph (1) of §4, and, in addition

b) about the beneficiaries determined by paragraph (1) of §4/a)the amounts due to them, and, in addition, the number of designators relating to the beneficiaries.

Through September 15th the Minister of Finance publishes the information in two national daily newspapers.

(5) The Ministry of National Cultural Heritage transfers the amount according to the data processing and legal remedy situation of December 31 – which is increased on the basis of supplementary list of the previous period in accordance with paragraph (7) of §6, to the beneficiaries mentioned in clause a)of paragraph (1) of §4/A through January 10th of the year following the year of the designation statement."

(2) §6 of the 1% Act shall be supplemented by the following (7)-(8) paragraphs:

"(7) OTFC publishes the amounts due to the beneficiaries based on paragraph (1) of § 4/A on the basis of resolutions ending legal disputes after the designation year on a supplementary list attached to its August 31st information of the current year.

(8) The amount designated for the benefit of an advanced budgetary purpose determined in clause b) of paragraph (1) of §4/A is contained in the budget of the chapter concerned in the use of it, with the obligation of publishing within one year following its use."

§ 7 (1) Clause e, of paragraph (1) of §7 of the 1% Act shall be replaced by the following provision:

[(1) The designation included in the statement is invalid, if any of the following cases may be established:]

"e) the beneficiary, which is obliged for that, does not certify the conditions described in paragraph (2) of §4 in the procedure described in paragraph (6) of §5, or it does not fulfill its declaration and information obligation included in paragraphs (2)-(3) of §4."

(2) Paragraph (3) of §7 of the 1% Act shall be replaced by the following provision:

"(3) If the application included in the designation statement qualifies as invalid according to this Act, because of circumstances arising in the sphere of interests of the beneficiary, tax authorities inform the tax payer making the designation statement without passing a formal resolution and indicating the reason. The deadline for the information is 30 days following the refusal of the beneficiary."

(3) § 7 of the 1% Act shall be supplemented by the following paragraph (7):

"(7) If the supporting purpose formulated by the designation statement of the private individual is not realized for some reason – the beneficiary does not comply with the requirements of §4, or the beneficiary does not demand the support -, the designated amount must be used in order to support civil society organizations, as determined by the advanced budgetary purpose determined in the budgetary chapter of the Parliament."

§ 8 (1) This Act shall enter into force on January 1st 2001, and shall be applicable in case of the designation statements attached to the income tax returns, or the employer's accounts of the year 2000 for the first time.

(2) At the same time with its entering into force, clauses j,-m, of paragraph (1) and clause e, of paragraph (2) of §4, paragraph (4) of §4/a)and paragraph (2) of §8 shall be repealed.