The Government announced several changes in the corporate taxation area on 20th June 2017, including the introduction of a new patent box regime in line with the modified nexus approach developed as part of BEPS Action 5. The government also proposes the introduction of measures to comply with the EU anti-tax Avoidance Directive (Council Directive (EU) 2016/1164), including new exit taxation rules. The changes also include controlled foreign company (CFC) rules, and hybrid mismatch rules, as well as new transfer pricing rules regarding intangibles and measures against VAT fraud. The first draft texts are subject to further negotiations within the Government after which they will be submitted to the Slovak Parliament. These new measures are intended to be effective from January 1, 2018.
The Double Tax Agreement (DTA) between United Arab Emirates and Slovak Republic was signed in 2015 and was come into force on 1st of April 2017. This treaty will be applicable from 1st of January 2018.
The 2015 Double Tax Agreement (DTA) between Slovak Republic and Armenia was entered into force on 1st of February 2017. It will be applicable from 1st of January 2018. In accordance with this treaty, tax withholding rates are 5% or 10% in case of paying dividends, depending on the holding percentage of recipient, 10% for interest and 5% for royalties.
The Parliament approved the bill regarding country-by-country (CbC) reporting on 1st February 2017. It must be published in the Collection of Laws for becoming law. This bill will become effective as from 1st March 2017. It was submitted to the parliament on 4th November 2016. The following requirements have been approved:
Slovak Republic introduced Country-by-Country Reporting (CbCR) based on the recommendations of the OECD. All multinational corporations with consolidated annual revenues of at least EUR 750 million will be obliged to file a CbC report. The CbC report shall be submitted in the jurisdiction where the group’s ultimate parent company is tax resident and shall be exchanged with the jurisdictions where the group operates.
The Country-by-Country (CbC) report must be submitted by a company resident in Slovak Republic that is the parent company of a corporate group. A parent company is a company that is not a subsidiary of any other company in Slovak Republic. The country by country reporting requirement applies where the consolidated group revenue in the preceding year is at least €750 million.
The report must cover group revenue, distinguishing between related and unrelated parties; accounting results before corporate income tax (or similar taxes); and corporate tax (or similar taxes) paid or accrued, including withholding tax. The average number of employees in each entity must be reported.
The CbC report must be submitted within twelve months after the end of the tax year.
The Income Tax Treaty of 2016 between Slovak Republic and Iran has been ratified on 3rd January 2017 by the president of Iran for avoiding double taxation.
Suggested amendments to corporate income tax, individual income tax, transfer pricing and special levies in case of companies in regulated industries has been approved by the parliament on 23rd November 2016. The amendments have not yet been published in the Collection of Laws. A governmental package of proposed amendments on tax law has been submitted to the parliament and the changes are suggested to become effective from 1st January 2017.