Companies with offshore status in Hungary - companies which do not carry out any substantive activity in Hungary - will lose their privileged position and tax status from January, in accordance with European Union rules.
These companies will be paying corporate tax at 16%, compared to 4% before, and they will lose their exemption from local business tax as well.
These changes are prompting analysts to sound warnings about the 700 offshore companies registered in Hungary, since these companies could very easily pack their bags and move to another country.
But these companies could cut a big hole in the national budget: despite their low tax burden, they are estimated to have contributed almost HUF100bn to the government coffers.
So it comes as no surprise that the government - partly under pressure from the consultants' lobby - is looking at ways of keeping the companies here.
The recent 'obstacle-clearing' package will greatly reduce costs for offshore companies of developing into traditional enterprises. From January, interest and royalty income will no longer count towards local business tax (except for in the case of financial services firms). The government's 100 Step Programme will also mean that local business tax can be written off against corporate tax from next year.
Hungary may still remain attractive, however, especially since it has agreements with 60 countries, including Japan and the US, aimed at preventing double taxation.
And following January's changes, companies focused on interest and royalty income will benefit from a corporate tax rate even lower than Cyprus's 10%.