10-year tax breaks passed

Parliament passed a bill on investment incentives December 4, finally offering investors 10-year tax holidays.

The bill had originally been passed in September but was sent back to parliament by President Rudolf Schuster after some MPs raised objections to terms in the law.

Besides 10-year tax holidays the new incentive package introduces a subsidy of up to Sk10,000 for each employee at firms offering requalification courses, and other subsidies for the creation of new jobs.

Both foreign and domestic companies investing Sk400 million can qualify for the incentives package. That limit is lowered to Sk200 million in regions where unemployment is more than 10%. The law will come into effect as of January 1 next year.

Investment experts say the incentives will put Slovakia on an equal footing with its regional neighbours in the race to grab foreign investment dollars. The Czech Republic and Hungary have both attracted more than 10 times the total FDI of Slovakia.

A number of companies which began negotiations with Slovakia have in the past taken their business elsewhere because of poor incentives in comparison to Slovakia's neighbours. These include: French firms Faurecia (to Hungary) and Sagem (to the Czech Republic), and US firms Lexmark (to the Czech Republic), Polytech (to Cyprus) and Textron (to the Czech Republic).

Last year the country saw $2 billion in foreign investment, more than the total for the previous seven years put together. This year the government planned to have the new legislation on investment incentives, along with a law on the creation of industrial parks, in place as soon as possible to bolster their efforts to lure foreign direct investment (FDI).

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