The main development in Slovenia recently has been the increasing scrutiny by the tax inspectors of potential tax avoidance as the government attempts to grapple with the economic problems of the nation; the national debt is around 63% of gross domestic ...
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The main development in Slovenia recently has been the increasing scrutiny by the tax inspectors of potential tax avoidance as the government attempts to grapple with the economic problems of the nation; the national debt is around 63% of gross domestic product, though this is not a serious problem compared to the debt-to-GDP ratios in other EU member states. "The fiscal authorities started an avalanche of tax inspections" said one adviser.
Transfer pricing is the topic spoken of as the one that gets the most official challenges as the authorities appear to be concentrating more and more on how multinationals deal with their branch offices. This official interest in transfer pricing comes from a relative standstill a few years ago, with one adviser suggesting that a few years ago "nobody cared about it", but suggests now that clients are experiencing "more and more dawn raid inspections".
The emphasis on transfer pricing is seen in the investment that the authorities have made in training tax inspectors, with a number of their professionals having been trained in Norway and France in particular.
Disputes with the authorities are becoming more and more common in other areas also, with one adviser suggesting an increase in work concerning VAT reimbursements.
In terms of legislative changes, the debt-to-equity ratio to stay within the country's thin capitalisation rules will be reduced from 5:1 to 4:1 at the beginning of 2012, though this had been known for a while. The government also announced plans in the spring to introduce a bank levy. The proposals include a 0.1% tax on banks' balance sheet assets but unlike in other countries, the aim seems to be to increase lending as banks that increase loans to non-financial institutions by 5% will not be subject to the new tax.
And in March 2011, the government ratified a new treaty with Cyprus which was agreed last October. This was mostly based on the the OECD Model Tax Convention and replaces the old treaty between Cyprus and Yugoslavia signed in 1985. The new treaty provided clarification concerning permanent establishment and also stipulated a threshold of 5% on witholding tax on dividend, interest and royalty payments that cannot be exceeded if the beneficial owner is a resident of either of the two countries.
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