BRATISLAVA, December 1, (WEBNOVINY) — Employees and businessmen will see several changes in income taxation as of next year. Parliamentary deputies approved the amendment to the income tax law prepared by the Ministry of Finance on Wednesday. The ministry suggested cancellation of several exemptions in income taxation in the amendment, which Minister of Finance Ivan Mikos says, should help stabilize disrupted public finances and refine the taxation system. The new regulation should take effect as of next year.
The ministry further limits some advantages and exemptions from tax rules in the amendment. Medical staff members will not be allowed to reduce their tax base by costs of specialized post-graduate education. The effective exemption from taxation with income of up to fivefold the subsistence level will be replaced by a fixed sum of 500 euro with selected income. The Ministry of Finance also suggests harmonizing the flat deductible expenditures of self-employed private persons earning income from business or self-employment to a single level of 40 percent.
Another exemption to be canceled relates to income from the sale of real estate where the seller had a permanent residence at least for two years. The condition of five-year ownership including inherited immovables will be preserved. The Finance Ministry has suggested lifting the exemption from income tax related to rental and property sale by municipalities, counties and their budgetary organizations.
The changes will also affect non-taxable part of the tax base, which taxpayers can claim. The minister has prepared a limitation of non-taxable parts of the tax base for a taxpayer and for a wife to only so-called active income. This means that the deductible non-taxable part of the tax base will apply only to dependent activities and business. The deductible non-taxable part related to savings of specific purpose, life-insurance and supplementary pension insurance will be canceled.
When passing the amendment to the income tax law, MPs also endorsed an amending proposal, on the basis of which, spending money for business trips is specified in greater detail. As of next year, employees’ per diem spending money for business trips will be considered taxable income but remain tax expenditure in employers’ books in the provided volume.
Minister of Finance Ivan Miklos introduced planned changes in income taxation in mid-August. Ruling coalition parties were subsequently discussing some proposals at meetings of the Coalition Council. Based on outcomes of these meeting, the Ministry of Finance gave up for example its initial plan to unify and cut the volume of flat-rate expenditures to 30 percent or preserve non-taxable revenues from the sale of real estate, which owners owned for five years or inherited.
The strongest opposition party SMER-SD is expressly against the proposed changes in the income tax law. SMER MP and former State Secretary of the Ministry of Finance Peter Kazimir says that Iveta Radicova’s Cabinet often saves where the saving will not bring much gains, but will cause considerable harm to some groups of citizens. According to Kazimir, the draft legislation can be labeled as “cleansing“ from the viewpoint that it cancels existing exemptions in the tax system.
SITA