Slovak govt rejects report that it would change a law in order not to reduce VAT rate

By bne IntelliNews July 29, 2013

The Slovak government has rejected a report by SME daily, according to which the cabinet planned to change a law adopted by its predecessors in order to leave the value added tax (VAT) rate at its current level of 20%, Hospodarske Noviny daily reported. According the currently valid law, the VAT rate should fall to 19% from 20% once the general government deficit shrinks to below EU’s limit of 3% of gross domestic product (GDP), which is the plan for this year.

Erik Tomas, director of the press and information department of the government office, said that the information published by SME was not correct although Prime Minister Robert Fico was quoted in the report as saying that his government will change the law to keep the higher VAT rate. Tomas said that if the budged gap shrinks to below 3% of GDP this year, the VAT rate will also fall to 19% as the legislation envisages. “The official stance of the government, repeatedly confirmed by the Finance Ministry, is that it will stick to the existing law,” Tomas was quoted as saying.

The government of Iveta Radicova hiked the VAT rate to 20% two years ago as a temporary measure aimed at reducing the budget gap. The deficit narrowed to 4.3% of GDP in 2012 from 5.1% in 2011 and is projected to fall to 2.94% of GDP this year. In that case, the VAT rate will fall to 19% as of 2015, which will result in a loss of state revenues of about EUR 180mn.

Related Articles

Evolution Equity Partners closes $125mn cybersecurity-focused fund

Evolution Equity Partners announced on 17 July the final closing of a new fund with total capital commitments of $125mn to make investments in cybersecurity and next generation enterprise software ... more

Slovak celebration of decent grain harvest marred by sheep’s milk protest

Slovakia’s grain harvest is this year likely to amount to 2.5mn tonnes, 20% down year on year, but comfortably enough to cover domestic needs and leave a million tonnes for export, SITA newswire ... more

Central European and Baltic economies shrugging off political uncertainty

Medium-term economic growth forecasts for Central Europe and the Baltics have been raised by The Vienna Institute for International Economic Studies (wiiw) in a report issued on June 29. The most ... more