Prior to the adoption of the state budget for next year, parliament passed a range of tax changes which have garnered a mixed reception from the business sector. Some groups have even pondered challenging some of them in the courts.
Among the positively perceived changes is a cut in corporate tax by one percentage point to 21 percent as of 2017, as well as a reduction in the tax burden on self-employed people, by increasing the flat-rate expenses they can deduct from their tax calculation base from 40 to 60 percent and increasing the maximum sum they can deduct from to €5,040 to €20,000 per year. Another positively perceived measure is the scrapping of tax licences as of 2018.
On the other hand, among the criticised changes is the replacement of current health insurance premiums of 14 percent paid on dividends, with a flat tax of 7 percent.
Also among the approved measures labelled as non-systematic is an 8 percent levy to be paid by insurance companies on new non-life insurance policies. Until now, insurers have paid such a levy only on liability car insurance policies.
The government is also changing the bases for calculation of social and health levies resulting in lower net earnings for those with higher salaries. Additionally, people will pay more for tobacco products as taxes on these products will gradually increase up to 2019.
Parliament also passed an increase and extension of the special tax paid by businesses operating in regulated industries – including companies active in energy, insurance or telecommunications. The levy was supposed to be temporary, to help consolidate the public finances and end in 2016, but the Finance Ministry proposed prolonging it and doubling the rate from 0.00363 percent to 0.00726 percent.
The new rate will apply on levies to be paid after December 31, 2016, during the years 2017 and 2018. In 2019 and 2020 it will be reduced by 15 percent and the rate will return to the current level in 2021, explained Finance Minister Peter Kažimír, as quoted by the TASR newswire.
The increased and extended levy should raise €167 million next year. This is €90 million more than this year, the Sme daily wrote.
Energetický a Průmyslový Holding (EPH), which owns stakes in several energy companies in Slovakia, including the gas transmitter Eustream and the dominant electricity producer Slovenské Elektrárne, says it is considering challenging the increased levy.
“EPH lawyers are analysing the law passed by parliament in order that they are prepared to challenge it in the courts as well in international arbitration,” said Daniel Částvaj, EPH spokesperson, as quoted by Sme.
Telecom operator O2 has joined the critics too. It considers the extension of the levy as unfair, arguing that the need for such a measure has already lapsed.
“It is neither systemic nor legitimate to look for sources for the state budget forever in the private sector,” said general director of O2 Peter Gažík. “We will respect this law, but we also ponder possible legal steps.”