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Government approves tax changes

AT ITS session yesterday, the Slovak cabinet approved a set of tax changes including a new “millionaire’s tax” and a reduced VAT rate for medicine and selected health care equipment.

People earning over Sk47,600 per month will henceforth pay more in taxes to the state. Starting from this gross wage, taxpayers who earn more will no longer be able to deduct the full amount of the basic non-taxable amount of Sk95,000. This tax-free allowance will gradually be reduced for higher earners, and will drop to zero for people earning Sk88,500 or more per month.

The government also decided that people saving for pensions in supplementary accounts in the “third pillar” of the pension system will continue to be allowed to deduct Sk12,000 per year from their tax base, even though the cabinet originally planned to cancel this advantage, the Hospodárske noviny daily wrote.

The government also softened its original position on the planned cancellation of the possibility for firms to donate 2 percent of their taxes to NGOs. Firms will next year still be able to assign 0.5 percent of their taxes to non-profit organizations.

The government also reduced the VAT rate on selected health care equipment and medicines from the current 19 percent to 10 percent.

It was not made clear after the cabinet session what impact these changes will have on the state budget. The Finance Ministry should provide the figures today.

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