BRATISLAVA, September 22, (WEBNOVINY) — Ministers have supported the proposed increase of the basic value-added tax rate from the current nineteen percent to twenty percent and cancellation of a tax alleviation on products sold directly from farms on Wednesday. These measures should bring additional EUR 185.5 million in tax revenues for the state budget next year. In 2012, the Finance Ministry estimates the increase in revenues of over EUR 196 million. A year later, the tax revenue should rise by over EUR 209 million. This stems from a draft amendment to the law on VAT, which the Cabinet approved on Wednesday.
Following approval in parliament, the changes in VAT rates are to take effect as of January 1, 2011. The basic VAT rate should temporarily increase to twenty percent, while the reduced VAT rate of six percent on foodstuffs sold directly from farms will be canceled and the products will be taxed according to the new rate, too. The Finance Ministry prepared the increase of the VAT rate as a temporary measure whose effectiveness will terminate when the deficit of the general government will be squeezed below three percent of gross domestic product. The ministry further specified in the draft that between January 1 of 2011 and the last day of a calendar year in which the European Commission releases data on the current deficit of public funds of the Slovak Republic below three percent, the basic rate on goods and services will be twenty percent from the tax base. The ministry will announce the end of the period in which the increased VAT rate applies in a generally binding legal regulation.
The Coalition Council agreed last week to increase Slovakia’s value-added tax (VAT) rate from the current nineteen percent to twenty percent as of the beginning of next year. “We call it “Fico’s tax“, said the prime minister after the council meeting. Radicova specified that the current 10-percent VAT rate on medicaments, health aids and books remains unchanged.
The planned increase of the basic rate of the value-added tax (VAT) by one percentage point to twenty percent can result in higher prices of some goods and services. The Finance Ministry estimates that prices will grow 0.7 percent faster. The average annual inflation should thus reach 3.7 percent next year, and harmonized inflation 3.5 percent.
SITA
