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Tax license to target loss-making companies

The Finance Ministry plans to impose so-called tax licences, a minimum fee for companies that previously declared losses in their tax declaration and thus avoided paying taxes, but the Republic Union of Employers (RÚZ) complains that the measure will only place an additional tax burden on entrepreneurs.

The Finance Ministry plans to impose so-called tax licences, a minimum fee for companies that previously declared losses in their tax declaration and thus avoided paying taxes, but the Republic Union of Employers (RÚZ) complains that the measure will only place an additional tax burden on entrepreneurs.

“Prior to presenting the proposal itself we conducted an analysis of paying the income tax applicable to legal entities,” Finance Minister Peter Kažimír said, as quoted by the TASR newswire.

Over the past four years, more than 60 percent of all legal entities registered in Slovakia had a zero tax liability, which represents approximately 100,000 individual businesses, Kažimír said.

The minister also said the government is considering exempting newly-emerged firms from the obligation and postponing the payment of the licence for a year for businesses facing financial difficulties.

According to the RÚZ, the new tax is problematic as it is similar to the minimum mandatory deductions for the self-employed.

“The budget as a whole does not bring any concessions or incentives for entrepreneurs, but rather places an additional tax burden on them,” said RÚZ President Marián Jusko, as quoted by TASR. “Companies that will be subject to the special levy on regulated entities will surely be dissatisfied. The introduction of the licence will also negatively affect some of our members. Although these measures are still up for negotiations, we refute the very principle of this charge in that it applies even to those who do not make a profit.”

The new tax licence is among the measures included in the budget proposal which the government passed on October 10. The Finance Ministry also wants to decrease the corporate tax from 23 to 22 percent, and hike the salaries of state employees and teachers.

The 2014 budget counts with increase in funds for four ministries. The Environment Ministry will use €414 million in 2014, a rise at 37.2 percent from this year. The Interior Ministry will receive by 124 percent more than this year, with its budget increasing to €2 billion next year. Also the budget of the Health Ministry will increase, as it will receive €1.2 billion, by 2.29 percent more that this year. The Justice Ministry will use €316 million in 2014, a rise at 1.4 percent from this year.

On the other hand, the Education Ministry will have to make do with €1.45 billion (by 41 percent less than this year), while the Transport Ministry will receive €2.17 billion (down by 4.88 percent compared with this year). The Labour Ministry will use €2.1 billion next year, which is by 3.32 percent less than this year. The Agriculture Ministry will have at its disposal a total of €1.11 billion, down by 11.1 percent from this year’s sum. Also the budget of the Defence Ministry will decrease to €744.7 million, down by €3.72 million. The Culture Ministry will get €182.47 million, which is €4.77 million less than in 2013. The Foreign Affairs Ministry will use €115.7 million next year, which is by 1.36 percent less than this year. The Agriculture Ministry will receive €1.11 billion, down by €138 million. Also the finances of the Finance Ministry will curb to €280 million, down by €5.45 compared with this year, TASR wrote.

Source: TASR

For more information about this story please see: 2014: Wages unfrozen; taxes change

Compiled by Radka Minarechová from press reports

The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.

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