Act on Value Added Tax (1992)

ACT LXXIV OF 1992 ON VALUE ADDED TAX (as amended through 1998) (unofficial translation, excerpt)

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CHAPTER II DEFINITIONS

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Sale of Products

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Section 7.

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(3) The following shall not be regarded as sale of products:

a) donations granted in kind to foundations in the interest of the assumption of obligations in the public interest, if the cash value of such in-kind donation is deemed to be tax deductible, or to be an item which does not increase the tax base pursuant to Act CXVII of 1995 on Personal Income Tax or Act LXXXI of 1996 on Corporate Tax and Dividend Tax, respectively;

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CHAPTER VII TAX EXEMPTION ON THE BASIS OF ACTIVITIES

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Activity-Based Tax Exemption in Respect of the Importation of Products

Section 31.

(1) The duty-free importation of products shall be exempt from tax, except for importation of products which

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i) is based on customs exemption provided for a foundation or a public foundation;

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CHAPTER XVIII CLOSING AND TRANSITIONAL PROVISIONS

Authorizations

Section 71.

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(5) The Minister of Finance is hereby authorized to grant, in agreement with the Minister of Foreign Affairs, exemption from the payment of tax to public service international organizations that have been granted identical or similar benefits by virtue of international treaties or the legal practice of other countries.

(6) Upon justified request and within its own sphere of competence, the tax authority is hereby authorized to permit, on the grounds of equity, the refund of pre-charged tax, not deductible pursuant to the provisions of this Act, related to expenses incurred in the interest of the activities defined in Paragraph a), to such social organizations, churches and foundations which comply with all of the following conditions:

a) it serves the fulfillment of social, health-care, educational, cultural, religious, environmental protection or regional and settlement development objectives affecting a wide range of citizens and the organization has been registered at least one year prior to the year of submission of the tax refund application as an organization conducting such activities,

b) the organization is not striving to make a profit neither by virtue of its deed of foundation, other statutes or document for establishing the organization, nor in fact, and does not distribute any potential profits earned in spite of the prior, but rather applies such to the support, improvement or expansion of the activities described in Paragraph a), and

c) the organization does not provide any monetary or in-kind remuneration (including the reimbursement of expenses) to its chief officer, administrative staff or to the persons participating in its administration, and such persons and their relatives do not directly or indirectly benefit from the operation of organization.

(7) The eligibility for tax refund shall be terminated upon the organization's failure to satisfy any of the conditions set forth in Subsection (5).

Section 72.

(1) Upon a justified request by an importer, the customs authorities may, within its own sphere of competence, grant an exemption from the payment of tax, if

a) the importation of products without consideration serves the fulfillment of public duties, thus in particular social, health-care, educational, cultural, religious, environmental protection, regional and settlement development objectives affecting a wide range of citizens, and

b) the importer has no entitlement to tax deduction in this respect.

(2) Upon a justified request by a beneficiary, the tax authority shall, within its own sphere of competence, refund the pre-charged tax, not deductible pursuant to the provisions of this Act, if an international treaty promulgated by a legal regulation or published in the Official Hungarian Gazette (Magyar Közlöny) stipulates the use of monetary aid received from abroad on condition that the beneficiary of such aid is to be granted exemption from paying the tax included in the price of expenses financed from the aid.

(3) Upon a justified request by a beneficiary, the tax authority may, within its own sphere of competence, refund the pre-charged tax, not deductible pursuant to the provisions of this Act, if the foreign national from whom the donation was received stipulates the use of the monetary aid of foreign origin on condition that the beneficiary of such donation is to be granted exemption from paying the tax included in the price of expenses financed from the donation as serving the fulfillment of public duties, thus in particular social, health-care, educational, cultural, religious, environmental protection, regional and settlement development objectives affecting a wide range of citizens.

(4) In respect of the case described in Subsection (3) a certified document regarding the donation shall be attached with the application along with a deed issued by the authorities of the foreign state in question verifying that the grantor of the donation accounted for the amount of the grant in accordance with the applicable legal regulations on taxation.

(5) The tax refund set forth in Subsections (2) and (3) may be granted up to the percentage as appropriate for the percentage of the expenses covered by the monetary aid or donation.

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