The Finance and Budget Committee of the National Council of the Slovak Republic recently proposed some changes to the Slovak Income Tax Act. The proposed changes cover reduction in the corporate income tax rate, carry forward of tax losses, transfer pricing (TP) deadlines and enforcement and service PEs. On approval, the majority of the proposed changes would come into effect on 1 January 2014.
The corporate income tax rate will be reduced from 23% to 22%. Tax loss carry forward would be reduced from seven to four years, with the further restriction that the amount of losses that can be used will be capped at one quarter of the tax losses carried forward. These new rules would also apply to losses incurred prior to 2014.
In international tax changes the deadline for taxpayers to present TP documentation has been reduced from 60 to 15 days from the Tax Authority’s request. The Tax Authority may also demand TP documentation even without initiating an official audit. The proposed amendments also reintroduces the a service PE into Slovakia’s tax law; under these new rules, a service PE would be deemed to exist in case of a provision of services (including consultancy and management services) by a non-resident taxpayer.
