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TAX & AUDIT

Taxes get more lucrative for government

CIGARETTES and tobacco products could get more expensive next year.
Parliament moved the draft revision to the law on the excise tax on tobacco and tobacco products to the second reading in mid-September, which would introduce higher excise taxes as of January 1, 2008.

Excise tax on tobacco set to rise next year


CIGARETTES and tobacco products could get more expensive next year.

Parliament moved the draft revision to the law on the excise tax on tobacco and tobacco products to the second reading in mid-September, which would introduce higher excise taxes as of January 1, 2008.

The minimum excise tax per cigarette would increase from the current Sk1.70 to Sk2.10 next year (approximately 5 eurocents to 6 eurocents). The same tax would apply to cigars, which currently carry a tax of Sk1.40. The excise tax per kilogram of tobacco would go up from Sk1,350 to Sk1,930 according to the proposal, the SITA newswire wrote.

The tax increase was proposed to let Slovakia meet the allowable limits in the European Union, the Finance Ministry said.

"The minimum excise tax on 1,000 cigarettes is €45, which meets the level set for 2007, but not for 2008," the accompanying material to the draft revision reads. "For this reason it is necessary to propose a change of the tax rate for cigarettes.

Last year, there were 4.3 billion cigarettes released on the market at an average excise tax per piece of Sk1.82.

The draft, in the form proposed by the Finance Ministry, would bring an extra Sk1.2 billion of revenue to the state budget. In 2009, revenues exceeding Sk1.41 billion could be expected, and in 2010 it would be Sk1.46 billion.


Business set-up services to merge under one roof


ENTREPRENEURS will soon be able to make one stop to apply for the criminal record statements, health insurance registration and tax office registration they need to start a business.

The existing Trades License Offices plan to create unified contact centres to provide all three of the services, the Hospodárske Noviny daily wrote.

"As early as October, the entrepreneur or self-employed person will be able to register his or her trade, file the application for the certificate, and give personal data for income tax registration and for registration to the obligatory health insurance system," said Silvia Miháliková from the communication office of the Interior Ministry.

This ministry ordered the creation of the centres by amending the Act on Trade Licenses.

Entrepreneurs will not be able to get their trade license on the spot in the contact centres - a prospective business owner or self-employed person will have to wait seven to 10 days for the necessary documents.

Social insurance has so far been left off the list of services provided in the new centres.

"This is an obstacle that will have to be removed," said the president of Slovak Trade Association, Peter Masár. "Everything depends on the finances, and we will know more after the budget has been approved."

The newly-formed centres will be electronically connected to other institutions.

"The unified contact spot will receive the data, and in the time period set by the law, it will send them to appropriate offices," Miháliková said.

That period will be seven to 10 days.

"In the centres, the taxpayer will get the general registration form at the Tax Office, together with the trade license," said the spokesperson of the Tax Directorate, Adriana Plešková. "The contact centre will submit the filled-in form to the Tax Office, which will then issue a certificate with the Tax Number and send it to the taxpayer."

Creating the new centres is not expected to require any extra money or additional hiring.

"The centres will copy the existing network of Trade License Offices at District Offices," Miháliková said.

"The new centres will not burden the budget, as the recruitment of new people is not expected," Masár added. "They should manage without any problems."


Tax audits rake in an extra Sk8.7 billion


TAX offices collected an additional Sk8.7 billion (€257.5 million) last year thanks to 31,243 audits.

That was an increase of Sk833 million from 2005, the Sme daily wrote.

Auditors found the biggest errors in the value-added tax category, amounting to an additional Sk4.82 billion.

The general manager of the Tax Directorate, Igor Šulaj, said some of the most complex cases were tax frauds involving VAT deduction, in which whole chains of companies are involved.


Cabinet expects to get more from taxes


THE FINANCE Ministry has raised its expectations for how much income the public administration will get from taxes this year.

This year, in addition to the Sk250 billion (€7.4 billion) first expected, another Sk2.44 billion is projected to come to the state budget from tax collection, the ČTK newswire wrote. And the higher-than-expected numbers are expected to continue after this year.

Economists usually credit bigger income from taxes to a rapid economic growth. The pace of Slovakia's growth exceeded eight percent last year, mainly thanks to increased car production.

Apart from higher profits for companies, growing wages have also contributed to the higher income and excise taxes.

But a higher tax income doesn't mean the government can automatically spend more money, the ministry's Institute of Financial Policy noted.

Whether Prime Minster Robert Fico's cabinet will be able to spend the extra tax money will mainly depend on the management of the public administration bodies, especially the social security provider Sociálna Poisťovňa, which collects social levies and pays pensions.

But the expected rise should be reflected in higher levy revenues for Sociálna Poisťovňa and the health insurers.

The government has to control its expenditures so that Slovakia can fulfill the criteria for the planned introduction of the euro in 2009.

According to ministry analysts, upcoming legislative changes will not be reflected significantly in the tax incomes. For example, the excise tax on tobacco products is expected to increase next year. VAT earnings will decrease after the lower, 10-percent rate is extended to the medical equipment needed for patients with incontinence. And there will be changes to the tax deductions for bottles that include a deposit fee.


Regional offices lack staff for drawing Eurofunds


SLOVAKIA'S regional offices have only five of the 35 employees they need to apply for and manage Eurofunds over the next six years, the TASR newswire reported.

That's according to a Finance Ministry audit to determine how ready the institutions connected to the EU structural funds application process are for their duties for the new programme period, which lasts from 2007 to 2013.

So far, the only regions that have employees dedicated to the Eurofunds agenda are Košice and Banská Bystrica. There are a total of five employees in place: four in Košice and one in Banská Bystrica.

That means that in terms of capacity, the remaining regions are not prepared to draw EU structural funds, the audit determined.

The preliminary results come from the first phase of the audit, which was conducted by KPMG Slovakia, said Marian Janušek, the Minister for Construction and Regional Development.

The audit has so far examined 48 offices out of a total of 62. He said the first phase ended on August 15, and the second phase will be completed by October 15.

"There are quite a lot of things that must be solved in one way or another, although during the audit, many things and problems were solved with the institutions concerned," Janušek said.


Ministry's internal audit not designed to sack people: Kubiš


THE GOAL of the internal audit at the Foreign Affairs Ministry is not to sack people, but to make the ministry operate more effectively and assess how modern it is compared to ministerial bodies abroad, Foreign Affairs Minister Ján Kubiš told the media.

"The audit has entered the implementation phase and for me, it is not about some directive number," he was quoted by the SITA newswire.

Results are expected by the end of this year, and the ministry will compare them with their own inquiry, Kubiš said.

"The audit just gives recommendations, which we will either accept or not," he said. "Only after we have evaluated them, and based on our own data, we will adopt a decision about the necessary organisational changes."

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