Spectator on facebook

Spectator on facebook

New tax raises mixed emotions

The measure will impact rather Slovak firms.

Companies will soon have to pay a new tax.(Source: TASR)

The planned changes to taxes will only increase the already high tax and payroll tax burden of companies. This is how critics evaluate the latest changes adopted by the government, including the controversial tax on dividends. While the state claims that the measure should reduce payments from smaller firms, critics warn it will not bring the desired effect.

“We perceive it as a loss of the last competitive advantage of Slovakia and the last motivation of entrepreneurs not to be dependent on banks and to have cheaper sources for investments and their further development,” Tibor Gregor, executive director of Club 500, an association uniting the biggest employers in Slovakia, told The Slovak Spectator.

Under the rules adopted by the government in late September, companies will pay a new 7-percent tax on dividends which will in fact replace current contributions to public health insurance, the rate of which is set at 14 percent. 

The new tax will impact about 2,500 owners of companies. The ministry expects that it will increase revenues to the state budget by some €51 million, its spokesperson Alexandra Gogová told The Slovak Spectator.

Miriam Galandová, deputy chair of the Slovak Chamber of Tax Advisors, however, criticises the way the state wants to impose such important tax changes. It should have been preceded by an in-depth analysis of advantages and disadvantages, contributions, and also discussion with experts. 

“The submitter of the amendment has not introduced any analysis or idea of new concept on income tax law,” Galandová told The Slovak Spectator, adding that the plan has not even been part of the government’s manifesto.

There is also a possibility the tax may increase in the future, admitted Martin Vlachynský, analyst with economic think tank INESS.

Concerns remain

The proposed rules for tax on dividends, however, has already been changed. The Finance Ministry originally proposed the rate at 15 percent and sought to enforce the tax retroactively. The rules adopted by the government however changed that. The ministers also propose to exempt landowners from paying the tax if their annual revenues amount to less than €500. Even if their revenues are higher, they will pay the tax only from the sum exceeding this cap, the SITA newswire reported.

Moreover, the tax should substitute levies from dividends paid by the owners or shareholders of companies as part of contributions to public health insurance. Under the current rules, there is a cap for the paid sum set at about €60,000 a year which may cause representatives of small and medium-sized companies to contribute more than big firms, according to the Finance Ministry.

Under the new rules, the smaller shareholders may pay half the sum they pay now, Finance Minister Peter Kažimír said, as reported by the SITA newswire.

The rest of this article is premium content at Spectator.sk
Subscribe now for full access

Annual subscription
29 €
Buy
You save 17.80€ compared with monthly subsription
Quarterly subscription
9.90 €
Buy
You save 1.80 € compared with monthly subsription
Monthly subscription
0.98 €
Buy
Price is only for new subscribers for their first month. All other months are standard price of 3.90 €

I already have subscription - Sign in

Subscription provides you with:
  • Immediate access to all locked articles (premium content) on Spectator.sk
  • All exclusive materials published on our web page
  • A PDF version of the latest issue of our newspaper, The Slovak Spectator, emailed directly to you (26 issues a year)
  • Access to all premium content on Sme.sk and Korzar.sk

Topic: Finances and Advisory


Top stories

In praise of concrete

It was once notorious for its drab tower blocks and urban crime, but Petržalka now epitomises modern Slovakia.

Petržalka is the epitome of communist-era architecture.

Slow down, fashion

Most people are unaware that buying too many clothes too harms the environment.

In shallow waters, experts are expendable

Mihál says that it is Sulík, the man whom his political opponents mocked for having a calculator for a brain, who “is pulling the party out of liberal waters and towards somewhere completely different”.

Richard Sulík is a man of slang.

Blog: Exploring 20th century military sites in Bratislava

It seems to be the fate of military sites and objects in Bratislava that none of them were ever used for the purposes they were built for - cavernas from WWI, bunkers from WWII, nuclear shelters or the anti-aircraft…

One nuclear shelter with a capacity for several hundred people now serves as a music club with suitable name Subclub (formerly U-club).