FinMin is surprised by lower corporate tax collection

In response it will cut tax revenue prognosis for the following four years.

Finance Minister Peter Kažimír Finance Minister Peter Kažimír (Source: TASR)

Even though macroeconomic forecasts for the development of Slovakia’s economy are positive, the most recent estimates of analysts with the Finance Ministry on income and payroll tax revenues show a worsened outlook for general government revenues. In particular, the development of corporate income tax is to blame, which, after strong growth last year, is lagging behind this year. As a consequence, the Finance Ministry has cut its forecast for revenues from taxes and levies in 2017 by €242 million, next year by €231 million, in 2019 by €200 million and in 2020 by €169 million, the SITA newswire reported.

Finance Minister Peter Kažimír talks about the “phantom” profitability of companies for 2015, which also confused his department’s analysts. Mainly the end of available EU funds in 2015 is behind this.

“Analysts may have underestimated the size of the one-off character of this tax in 2015, mainly due to the ending of EU funds and the correction in the past year,” said the minister.

The problem is, however, that state analysts still do not have at their disposal enough data on corporate tax collection for 2016. This is mainly due to postponed tax duty, when a record number of businesses postponed the delivery of their tax return this year. According to Kažimír, the Financial Administration still does not have information on taxes from about 40 percent of companies.

Thus, the September prognosis for the development in the collection of taxes and levies will be much more precise than the current one, said Kažimír.

In Slovakia, the deadline for submitting tax returns and payment of corporate taxes is March 31. But companies can postpone this duty by three months to June 30 without needing any special reason for doing so. They only need to announce their intention to the respective tax office.

Kažimír does not plan to change this.

“We are not planning any change for now,” said Kažimír. “This would mean a reduction of comfort for taxpayers.”

The finance minister is not panicked due to the lower forecast for tax revenues, but promises to slow down public spending. What he sees as important is that Slovakia’s economy remains fundamentally strong, a state which is confirmed by the prognoses of international institutions.

“The macroeconomic prognosis that indicates a healthy GDP growth and records in the labour market remains valid,” said Kažimír. “Collection of all kinds of taxes and levies, apart from corporate tax, is increasing.”

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