- Corporate Tax rate reduction to 16% – Reducing the rate by 1-2 percentage points would help the business environment, but we can only expect significant impacts after reducing the tax rate on point at which Slovakia would move into the group of the most progressive states in the EU. Ireland can be the example where they even through the most difficult crisis years did not increase its 15% rate. Today Ireland is the most stable among the group of the PIIGS states. Tax rate reduced from 22% to 21% since 1.1.2017.
- The introduction of a zero rate on reinvested profit – a way to encourage companies to invest in Slovakia. Very good experience with this measure has been in Estonia, where zero tax rate on reinvested profit has been established since 2000. It led to an increase of foreign direct investment, while the decline in corporate income tax revenue was only minimal in the early years, and quickly returned to normal.
- Delimit the tax deductibility of losses – currently the entrepreneur can apply the tax loss deduction for a maximum period of only four years backwards. However, business is a long term process and high profits often come only after a long period of losses. Businesses can end up in a situation where they pay taxes on income, despite cumulating substantial losses for several years. 15 EU countries have an time-unlimited deductibility of losses, while 7 countries have no restrictions on the total amount of the deductible amount (Belgium, Ireland, Latvia, Luxembourg, Sweden, United Kingdom, Malta).
- Introduce voluntary fiscal licenses for self-employees – (Optional) fiscal licenses would significantly reduce administrative burden to small businesses. Self-employed person would purchase an annual license and would be clear of any following tax and contribution payments for the rest of the year. License would cover minimum social and contribution payments (in 2016 this is 2 427.12 EUR per year) and an average income tax according to the income degree of license (various options). There would be three stages with the income ceilings, the latest income ceiling would be at the value of the compulsory registration for VAT (currently 49 790 EUR).
- Raising the ceiling for the advanced payments of personal income tax from 2 500 EUR to 10 000 EUR – Fiscally neutral and only with a very minor impact on cash flow, Advanced income tax payments unnecessarily increase the administrative burden on the taxpayer. Significant increase of this ceiling would not cause any complications.
- Abolish tax on motor vehicles – Controlled previously by regional administration, now it is set by the Ministry of Finance, thus depriving the regions to set the tax themselves and losing thus its main point. In order to save the high compliance administrative costs of companies, this tax should be abolished and tax revenues lost may be offset by the current high increase of VAT collection. Wear and tear of roads and related costs are already reflected in the excise tax on fuel and tolls.
- Cancelation of the registration fee for motor vehicles – Car registration fee (name “fee” is used because of hiding distortion of the internal market EU) is a selective tax whose administrative costs are too high, relative to the total revenue.
It significantly impairs the possibility of renewing the extremely overaged vehicle fleet in Slovakia (average age of vehicles is nearly 11 years), since it makes import of used cars from abroad more expensive. (Since 1.1.2017 the tax is graded according to the age of the vehicle). We propose to abolish this tax.
- Abolishment of the tax of regulated entities – The government has introduced a special tax, which aims to tax around ten specific companies (so called “regulated entities”), but affect also some smaller companies that do not have significant / monopoly position on the market, nor their sales are not the result of handling the unique infrastructure. Therefore this tax should be abolished.
- Cancellation the public broadcasting fee for employers – Today, the companies with no relation to broadcasting of state television and radio pay fees, based on the number of employees, despite often not even having or using a TV in their premises or business. In addition, it reduces the resources available for staff salaries (fee increases with the number of employees) and administration of the fees burdens the company indirectly.
- Cancellation of bank contributions – The role of the contribution is unclear (it was supposed to create a cushion for banking in case of a crisis, but after few years of existence became part of political games in saving a certain, non-related companies) We therefore propose to abolish the conscription and transfer the accumulated funds to the Deposit Protection Fund.
- Abolish the tax on electronic media storage – so called author’s fee, which is paid from the increasingly wider panoply of technical equipment (TVs, USB sticks, printers…), makes devices more expensive (eg. TVs by around 3%). Proceeds of this fee end up in the hands of quasi-administrators (collecting societies), which do not provide any transparent public audit of the use of these revenues.
- Steps to eliminate the “electricity tax” – Consumer prices of electricity contain plethora of hidden fees, used to subsidize various policies. This issue is detail analysed in our “Electricity tax” analysis, where we proposing the necessary steps to eliminate it.
- Make the 2 percent (of tax) contribution into art funds voluntary – artists should be able to freely decide whether to pay the special tax, or give up the related benefits.
Cancelation of the tax licenses – tax licenses (minimal tax, applied even to business with loss) are one of the symbols of the state hostility to business. Their contribution to the budget is not significant and as a de facto “tax on losses” entail many drawbacks. Cancelled since 1.1.2018.
Abolishing the responsibility of entrepreneurs of paying VAT for blacklisted suppliers – Entrepreneur should not replace the role of Ministry of Finance and be obligated to explore whether the supplier is not by chance on a “black list” of companies which did not pay VAT. Currently, if the blacklisted supplier does not pay its share on VAT, his client has to cover the payment. Cancelled 1.1.2018.