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ECONOMIC BRIEFS

Austrian Chamber of Commerce unhappy with investment incentives

Austria may be the second largest foreign investor in Slovakia after Germany, but the joint Sloval-Austrian Chamber of Commerce feels the Slovak government could be doing far more to attract investment.

Wolfgang Pruger, a member of the Chamber's Board of Directors, told a press conference on June 29 that the recently-approved tax holiday for joint-stock companies established after April 1 with at least a 75% share of foreign capital, is a measure that favours specific companies. The chamber, he said, would like to see a tax reform bill that applies to all companies, including Slovak ones.

Pruger said that the Slovak government should quickly slash the country's income tax rates, which are among the highest in central Europe (in Slovakia the corporate income tax rate is 40%, while in the Czech Republic it is 35% and in Hungary 18%). The introduction of a non-taxable portion of corporate income, similar to what the Czech Republic and Austria have done, would help boost investment, Pruger said.

The Austrian chamber also advocates simpler tax rules, as well as amendments allowing the unlimited transfer of losses from previous accounting periods to the following tax years, the ability to write off promotional costs and the deductibility of provisions created against unsettled claims.

Pruger stressed that such basic changes were necessary if Slovakia was to change its dismal FDI record (Slovakia has attracted one-seventh the FDI per capita of Hungary and one quarter of the Czech FDI total).

The volume of investments of Austrian companies in Slovakia from 1990 to 1999 is 13 billion crowns.

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