Finance Ministry increases estimate of tax collection by €290 million

The state’s income from tax and payroll deduction collection this year should be €290 million higher than estimated by the Finance Ministry in its February analysis, Finance Minister Peter Kažimír said at a press conference on June 24. “It’s mainly due to our successful fight against tax evasion,” he said, according to the TASR newswire. “It’s also the overall macro-economic climate, a better situation on the labour market and reviving household consumption that are having a positive impact on the state’s income.” He stressed that the effective VAT rate has been rising for six quarters. At the moment, it stands at 14.1 percent. [The VAT rate in Slovakia is currently set at 20 percent, with certain goods, such as medicines and books, having a reduced rate of 10 percent. The effective tax rate means that the state – due to tax evasion – in fact collected an amount as if the rate was actually set at 14.1 percent. – ed. note] The highest effective VAT rate in Slovakia has been in 2005 – 15.5 percent [at the time the actual VAT rate was 19 percent], while the lowest one was in the second quarter of 2012 – 12.5 percent [with the actual rate of 20 percent]. Kažimír also praised the income from the corporate tax which has been elevated to 23 percent as of 2013. For this year, ministry increased its October forecast of this tax by more than €80 million. “We collected almost €360 million compared to what would be if the rate were at 19 percent,” he said, adding that companies don’t seem to have had a higher inclination toward tax evasion.

The state’s income from tax and payroll deduction collection this year should be €290 million higher than estimated by the Finance Ministry in its February analysis, Finance Minister Peter Kažimír said at a press conference on June 24.

“It’s mainly due to our successful fight against tax evasion,” he said, according to the TASR newswire. “It’s also the overall macro-economic climate, a better situation on the labour market and reviving household consumption that are having a positive impact on the state’s income.”

He stressed that the effective VAT rate has been rising for six quarters. At the moment, it stands at 14.1 percent. [The VAT rate in Slovakia is currently set at 20 percent, with certain goods, such as medicines and books, having a reduced rate of 10 percent. The effective tax rate means that the state – due to tax evasion – in fact collected an amount as if the rate was actually set at 14.1 percent. – ed. note]

The highest effective VAT rate in Slovakia has been in 2005 – 15.5 percent [at the time the actual VAT rate was 19 percent], while the lowest one was in the second quarter of 2012 – 12.5 percent [with the actual rate of 20 percent].

Kažimír also praised the income from the corporate tax which has been elevated to 23 percent as of 2013. For this year, ministry increased its October forecast of this tax by more than €80 million.

“We collected almost €360 million compared to what would be if the rate were at 19 percent,” he said, adding that companies don’t seem to have had a higher inclination toward tax evasion.

The Finance Ministry also expects increases in tax revenues in the next few years. The prognosis for 2015 and 2016 has been upped by €200 million, while the estimate for 2017 is €145 million higher now.

The actual collection of value-added tax may eventually be even better, the SITA newswire quoted the Finance Ministry as saying. The forecast still does not include the positive risk from the recently adopted measures to further suppress tax evasion. The most significant is the introduction of ledger statements.

However, the Finance Ministry is not so optimistic regarding collecting taxes from the self-employed.

“In particular, a significantly worse tax settlement for the fiscal year 2013, where a positive impact of adoption of legislative changes was expected, has a negative effect on revenues from this tax,” says the ministry report.

“Reality shows that self-employed individuals significantly avoided the increased tax burden,” ministry’s Financial Policy Institute wrote, as quoted by SITA. For this year alone, the estimated revenue from this tax is lower by €20 million which is almost one-fifth of the annual budgeted amount.

(Source: TASR, SITA)
Compiled by Zuzana Vilikovská from press reports
The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.

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