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Cabinet approves overhaul of Slovakia’s tax and levy system

The much-debated changes to Slovakia’s system of taxes and mandatory payroll levies were approved by the coalition cabinet at its session on May 18, the TASR newswire reported. The measures include a so-called super-gross salary and reduction in payroll levies for social insurance programs and health insurance for some employees. The tax-exempt base is also proposed to be reduced from 19.2 times the minimum subsistence level to 18 times. In monetary terms, this means the tax-free base would be €200 less in 2012. The mandatory health-care levy is proposed at 9 percent, except for the disabled who would pay half the rate. The proposed social insurance levy is 19 percent for employees, 13 percent for self-employed persons and 10 percent for people working via work contracts, TASR wrote. The coalition partners agreed on a gradual reduction of the payroll levy burden on regular employees by 4 percentage points over four years, the SITA newswire wrote. According to the finance ministry, as quoted by TASR, the set of measures will have an unfavourable impact on public finances, with a loss of €59.9 million projected for next year.

The much-debated changes to Slovakia’s system of taxes and mandatory payroll levies were approved by the coalition cabinet at its session on May 18, the TASR newswire reported.

The measures include a so-called super-gross salary and reduction in payroll levies for social insurance programs and health insurance for some employees. The tax-exempt base is also proposed to be reduced from 19.2 times the minimum subsistence level to 18 times. In monetary terms, this means the tax-free base would be €200 less in 2012. The mandatory health-care levy is proposed at 9 percent, except for the disabled who would pay half the rate. The proposed social insurance levy is 19 percent for employees, 13 percent for self-employed persons and 10 percent for people working via work contracts, TASR wrote.

The coalition partners agreed on a gradual reduction of the payroll levy burden on regular employees by 4 percentage points over four years, the SITA newswire wrote. According to the finance ministry, as quoted by TASR, the set of measures will have an unfavourable impact on public finances, with a loss of €59.9 million projected for next year.

A total of 99.5 percent of employees are expected to be better-off due to the changes, the finance ministry said, adding that the same is true for self-employed with annual incomes up to €4,823 before tax and levies, which would cover 116,600 individuals.

However, the changes will take more from self-employed people who earn more than that amount and their number is projected to be 180,400. A total of 8,300 high-income employees will also see their take-home incomes reduced, along with individuals working via work-performance agreements.

The Sme daily reported that the Civic Conservative Party (OKS), whose four MPs sit in the parliamentary caucus of Most-Híd, is not in total agreement with some provisions of the proposal and they are ready to make challenges in parliament. Anton Marcinčin, an MP from the Christian Democratic Movement (KDH), also said he was not happy with the draft, Sme wrote.

Source: TASR, SITA, Sme

Compiled by Zuzana Vilikovská from press reports
The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.

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