The Slovak Republic was well known for introducing a flat tax in 2004, which started a wave of other countries following suit. Rates were set at 19% for personal tax, corporate tax and VAT.The election of a new Socialist government, which came into power ...
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The Slovak Republic was well known for introducing a flat tax in 2004, which started a wave of other countries following suit. Rates were set at 19% for personal tax, corporate tax and VAT.
The election of a new Socialist government, which came into power in March 2012, is set to change things. Several significant changes are planned for 2013; some are already available in draft form while others have just been announced.
The flat rate is to be replaced with a progressive rate reaching 25% for people on an annual income of more than €30,000 ($39,000). There will be a tax on bank deposits and a special levy on regulated businesses including telecommunications and utilities. The government also plans to increase the number of tax audits. "This is a socialist government coming so they see themselves as promising tax for the rich like the French," says one partner.
The former government had planned to cut VAT by one percentage point from 20%. The new administration has reversed that proposal and plans to keep the rate at 20%.
Despite the increases, advisers say the country remains in a favourable position. "The Czech Republic next door is proposing even higher increasing tax. If Czech had a lower personal tax rate, then you would certainly see an outflow of high paid key individuals," says one adviser. "There would be a shift given the similarity in language and culture, the fact that everyone is doing it reduces the risk of people having other options," he added.
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