THE SYSTEM for collecting taxes and social insurance contributions will change significantly in Slovakia in the coming years. The plan encapsulated in the acronym UNITAS is to unify the collection of taxes, social and health insurance contributions as well as customs duties into a single system.
The Finance Ministry has calculated the aggregate costs of the reforms to be €408.3 million through 2017 while they should bring savings of €1.275 billion. While the ministry expects that the reform will require substantial one-off investments particularly over the first few years, more significant savings and benefits should be seen after 2012. The reforms should also reduce employment in various bodies of the state administration by about 20 percent, the SITA newswire wrote.
In mid-August, the Slovak cabinet greenlighted the start of the first phase of the tax administration reform plan. The goal of this phase is to begin the process of unifying tax, customs and social insurance contributions. The cabinet approved a draft bill prepared by the Finance Ministry, which among other aspects, proposes to close several redundant offices of the tax directorate and launch eight tax offices in regional capitals and one national tax office.
“The closure of tax directorate’s offices should lead to the acceleration of control and decision-making processes and to a more effective transfer of information from the centre to the places where taxes are administered,” the Finance Ministry wrote.
The law on the new structure of the tax administration should become effective on January 12, 2012. Preparations for the new structure of tax offices will require €35.3 million in 2010, €33.8 million in 2011 and an additional €1.8 million in 2012. The ministry estimates that the new system would bring savings of €11.6 million already during the first year of its operation, in 2013. Most of this sum, as much as €7.3 million, should derive from the value of the real estates of the closed tax offices.
Another part of the first phase will be the merger of tax and customs administration.
The government of Robert Fico approved the concept of this reform in May 2008. The entire process is divided into two phases: the first, called UNITAS I, should combine tax and customs administration; and during the second, UNITAS II, the Finance Ministry wants to unify collection of all social insurance contributions into a single system. These include employer and employee contribution for old-age pensions, sickness and accident and unemployment insurance as well as premiums paid to the solidarity reserve fund and the guarantee fund and health insurance premiums.