Finance Minister Peter Kažimír (source: TASR)
The new tax package, recently presented by the Finance Ministry, will have a negative impact on the business environment in Slovakia, the representatives of the Slovak Chamber of Trade and Industry (SOPK) and Club 500 said at a press conference on August 23. The Finance Ministry, however, claims there is no reason to spread panic.
The package, which contains a proposal to introduce a tax on dividends, to increase the excise tax on tobacco and special deductions in regulated sectors, and fees for gambling activities, but does not propose a reduction of the special bank levies, will have a negative effect of €350 million annually on the Slovak business environment, the representatives of entrepreneurs claim.
The government has come up with new taxes at a time when its tax incomes are on the rise. For example, last year revenue from taxes was up by €1.3 billion compared to original estimates, the TASR newswire reported.
Meanwhile, tax collection improved by €310 million in the first seven months of this year.
“If these measures are carried out, it will have a huge impact, apart from introducing more uncertainty in the overall business environment in Slovakia,” said SOPK chairman Peter Mihók, as quoted by TASR.
There have already been some signals, including from significant business entities that have decided to leave Slovakia, and the organisations cannot rule out that others will follow, he continued. Moreover, many of the proposed measures will increase consumer prices, Mihók claimed.
Apart from that, too many legislative amendments increase the administrative and financial burdens for entrepreneurs.
“It’s hardly comprehensible for us and very difficult to be explained to small shareholders as to why the government is about to impose a tax on dividends – even retroactively since 2004 – when those dividends weren’t subject to taxes in line with the laws existing then,” said chairman of the Club 500 Vladimír Soták, as quoted by TASR, adding that the association is considering filing a complaint against the package with the Constitutional Court.
The Finance Ministry responded to the claims by saying the representatives of entrepreneurs only spread fear and panic. There is no reason for the scenarios they presented.
“With the tax on dividends we are replacing current health levies from dividends the shareholders, i.e. natural people, have to pay now,” the ministry wrote in a statement, adding that from the point of tax justice they are fairer than health levies.
Moreover, taxes on dividends are standard in tax systems of developed countries. Additionally, up to 33 of 35 members of the Organisation for Economic Cooperation and Development (OECD) have higher tax rates than the one proposed by the Slovak Finance Ministry.
The ministry also reminded of the plan to reduce the corporate income tax to 21 percent.
“We also want to say that there will be further discussion on these laws, so the gentlemen could have used founded arguments, and not spread panic and menace,” the ministry said.
