IN SHORT BUSINESS

Finance Ministry rejects German criticism

SLOVAKIA's Finance Ministry objected to statements by German Chancellor Gerhard Schröder that were critical of central and eastern European countries for reducing corporate tax levels.

"The question of direct taxes is fully under the authority of individual EU member countries... and the Slovak tax reform has strictly observed all EU directives," Peter Papanek, spokesman for the ministry, told the news wire TASR.

"Both the flat tax and the tax reform are fully compliant with agreements on dual taxation, other international agreements, and the Slovak constitution," he added.

In his criticism, Schröder said that the average corporate tax in central and eastern European countries was below 20 percent, while in the EU it exceeded 30 percent.

"In our countries we have tougher competition as regards both corporate expenditures and labour opportunities. Such policies do not allow them [central and eastern European countries] to finance their infrastructure projects from their own sources, which leads to co-financing from Brussels. Thus, at the end of the day, problems have to be shouldered by EU members, which we just cannot abide," he added.

According to Papanek, the best way to catch up with the current members is to create an appropriate business environment and attract new investment.

"Therefore we have prepared a tax reform to move the weight from direct to indirect taxes," he added.

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