Slovak Spectator 1733

8/4/2019 Slovak Spectator 1733

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Second pension pillar version 21

THE ACT on Pension Savings,passed during the second gov-ernment of Mikul Dzurinda in2004 with the objective of reform-ing Slovakias pension system,has now been amended 21 timesin its fairly brief legislative his-tory. The newest changes initi-ated by the government of IvetaRadiov are designed to remove

what her cabinet called deforma-tions in the pension systempushed through by the previousgovernmentof Robert Fico.

The most recent amendment,approved by parliament on

September 14, increases the num-ber of investment funds that parti-cipants can choose from, reducesthe scope of guarantees that hadbeen put into the law in 2009, andmandates that young workers en-teringthe labour force willagainbeautomatically enrolled in thesecond pension pillar, with the op-tion to withdraw within two yearsiftheychoosetodo so.

Labour Minister Jozef Mihlpresented the bill to parliament andargued that the newest changes tothe law will be beneficial to every-

one who is participating in thesecond pension pillar in whichtheir savings for retirement are in-

vested by private investment man-agement companies. Mihls prede-cessor as labour minister, Viera

Tomanov, responded that the gov-ernment is turning young workersinto vassals of the pension fundmanagement companies by someof the changes made via the newamendment.

Thethreepensionpillars

The original pension reform le-gislation passed in 2004 envisionedthree pillars in the countrys pen-sion scheme: the first pillar is thestate-administered social insuranceprogramme that provides a

monthly old-age pension benefitbased on the amount and the num-ber of years that a person contrib-utedto thepay-as-you-gosystem.

See#21pg12

SELECT FOREX RATES benchmark as ofSeptember 22CANADA CAD 139CZECH REP CZK 24.88RUSSIA RUB43.21GREAT BRITAIN GBP 0.87

HUNGARY HUF 293.06JAPAN JPY 102.59POLAND PLN 4.49USA USD 134

NEWS

NewombudsmanThegovernment risksa re-runof itsproblemsselect-inga newgeneralprosec-utor,with rivalcandidatesemergingto fill thejobofombudsman,whichcomesvacant nextyear.

pg 2

Internetcensorship?Internetfreedomcam-paignersare cryingfoulovera Finance Ministryproposal to forceinternetservice providersin Slov-

akia toblockaccessto un-licensedgamblingweb-sites.

pg 3

OPINION

Harabin's 'hydra'SupremeCourt presidenttefan Harabin hasonceagaintakenhis criticsaback,thistimewitha re-questto workfromhometwodaysa week.

pg 5

BUSINESSFOCUS

TaxdisharmonyAnEC proposalto intro-duce harmonisedEU-widerulesfor calculatingcor-porate tax bases hasbeenroundly criticisedin Slov-akia,withonly thecentralbank, theNBS, expressingsupport.

pg 6

Levelling localtaxesAfter complaintsfrombusinessesthat thetaxestheypay to localauthoritiesdiffer too muchfrom placeto place, theFinanceMin-istryhas proposedchangesto restrict municipalities'

rate-setting powers. pg 7

CULTURE

The'other'PicassoA unique exhibitionatBratislava's MirbachPalacefeatures100 works by Picas-so. Justdon't go expectingtosee anyCubism...

pg13

Partyleader RichardSulk and17 ofhis fellowFreedomandSolidarity(SaS)MPsstoodbeforethe camerasonSeptember20and saidtheywouldnotsupport theeurozonebailoutschemein aparliamentaryvote. Photo:Sme

Stand-off continues

over eurozone bailoutOBSERVERS are warning that itcouldend uphavinga moreseriousimpact on the country than thoseinvolved seem to realise. But thebattle of words over changes to theeurozone bailout scheme intensi-fiedon September20 when RichardSulk, the leader of the dissentingcoalition party Freedom and Solid-arity(SaS), linedup 18of hispartysMPs to restate that their party willnot support the proposed changesin a parliamentaryvote.

Slovakias Finance MinisterIvan Miklo suggested on the

same day that Prime Minister Iv-eta Radiov was inclined to tieratification of changes to theEuropeanFinancial Stability Facil-ity (EFSF) and creation of the newEuropean Stability Mechanism(ESM) to a confidence vote in thegovernment, after SaS had rejec-ted a compromise solution. Sulk

called the idea of connecting thefate of the government to the rati-fication a weapon of the highestcalibre on the part of the rulingcoalition, as well as an attack onRadiov.

The prime minister, who atthe time Miklo made the state-ment was on an official trip in theUnited States, said in response, asquoted by the Reuters newswire,that linking the vote was theoret-ically possible.

SeeEUROpg2

Vol. 17, No. 33 Monday, September 26, 2011 - Sunday, October 2, 2011On sale nowOn sale now FOCUS

of this issue

FOCUSof this issue

TAXES

Cabinet setsspecial levy

on banks

ENACTING a special tax levy on banks hasbeen a pet project of Robert Fico and hisSmer party. That passion never resulted inlegislation when Fico and his coalition

were in power between 2006 and 2010. Butnow the cabinet of Prime Minister IvetaRadiov has approved a special levy ondomestic banks and subsidiaries of inter-national banks in the hope of bringing anadditional 51 million into state coffersnextyear.

The amount of the levy approved bythe current centre-right government isnot nearly as hefty as that proposed bySmer, the largest opposition party, lastNovember or the amount that Smer isnow proposing but the banks are de-manding a much lower levy, arguing that

Slovakias banking sector did not need toreceive any financial assistance from tax-payers during the dark days of the 2009financialand economiccrisis.

SeeGAPpg4

BYBEATABALOGOVSpectator staff

Radiovmeets

Obama

TRANSPARENCY is a key principle in gov-erning a country, Slovak Prime MinisterIveta Radiov and US President BarackObama agreed during a personal meeting

between the two leaders in New York Cityon September20.Radiov and Obama met before a for-

um of the Open Government Partnership which the prime minister participated inas a part of her week-long trip to theUnited States. Radiov also attended aGlobal Investment Symposium calledRoad to Prosperity organised by the In-ternational Economic Alliance, an NGO;met with representatives from the Friendsof Slovakia association;and participatedinthe 66th plenary session of the United Na-tionsGeneralAssembly.

Radiov was also asked to give a lec-tureat NewYork Universitys schoolof so-cial research about the eurozone debtcrisis and the future of the common mon-etaryunion.

President Obama said he appreciated

the steps taken by Radiovs cabinet inbringing greater transparency to the gov-ernment.

SeeUSApg3

BYMICHAELATERENZANISpectator staff




2/16

Roma protest poor living conditions

NEARLY 200Roma demon-stratedinfrontof thePresid-entialPalaceon HodovoSquare to protestagainsttheirbad social situation andtheinaction ofthe govern-ment.The mainorganiseroftheSeptember 21 demonstra-

tion,Alojz Hlina, alsopro-posedsolutions to Romaproblems,the TASRnews-wirereported.

SometimesI feelthatinthiscountryproblemsare

treatedas ifthey have neverexisted, saidHlina, asquotedby TASR.

We proposeto establisha state-runcompany which

willissue lunchvouchers,addedHlina. Itwilluseitsprofitsto finance construc-

tion ofnew andreconstruc-tion ofold schools inre-gionswhere thefacilitiesarein a catastrophiccondition.

Compiledby Spectatorstaff

Harabin can work fromhome

SUPREME CourtPresidenttefan Harabin willnowspendonlythreedaysa

weekin theoffice,after theJudicialCouncilon Septem-ber19 approved hisrequesttoworkfromhomeonMondays andFridays,theSmedaily reported.

TheOfficeof theSu-premeCourt presidentex-plained thatHarabinpresentedhis request as anordinary judge.

Heaskedtoworkfromhome because heis chairandmember of an appellatesenate which passes rulingson themost serious crimes,theofficewrote ina state-mentpublished by theSITAnewswire.

Thesixmembersof the

JudicialCouncilwho per-mitted thearrangement ig-

noreda questionby a Su-premeCourt judge,MiroslavGavalec,about

whetherit wouldbe pos-sibleto runthecourt fromhome;they alsoignoredaninternalrule thata judgecannotstayhome ondays

whenhis senate hashear-ings.They alsoignoredthefactthat Harabin stilllacksa deputy whocan substituteforhimin hisabsence.

The onlyquestion Hara-bin hadto respond towashowmuch time itwouldtake himto make itto thecourt in emergencycases.Hesaidthatwhile itwouldtakehim 30minuteswhenheis inBratislava, when heisat home inthe village ofHranovnica in PreovRe-

gion itcould take himuptofivehours.

Sadiki sentence confirmed

CONVICTEDdrug smugglerandthereputedheadof thedrugmafiain SlovakiaBakiSadikihashad hissentenceof22 yearsin a maximumse-curityprisonconfirmedafterthe regionalcourt inPreov rejectedhis appealagainst an originalverdictpassedin June,the SITAnewswire reported.

Sadiki, whois currentlyonthe run, wasconvictedofleading a group that con-

trolled the smuggling ofdrugs,especially heroin,

through Slovakia between2007and 2008. Policebelievethatthey transportedabout120kilograms ofthe drugfromTurkeyin atleastsixconsignments. Theamountsinvolvedwould havebeenenoughto make morethan336,000 dosesworthan es-timated3.35million.

Thecourtsenatealsoconfirmed thesentences forSadikisaccomplices JurajJ.andJnC.,whowillspend

15 years ina medium-secur-ityprison.

Fewer people support Obama

THEPOPULARITYof USPres-identBarack Obamain Slov-akiais fading,a surveycon-ductedby theAmericanpub-licpolicy andgrant-makinginstitution,the GermanMarshall Fund,suggests.Whilelastyearabout76 per-centof Slovaks supportedhimas theleader ofthe US,this year hewouldbe sup-portedby only 58percentofrespondentshere, theSITAnewswirereported.

The funds survey tookplacebetweenMay 25andJune 17,andgatheredtheviews of 1,000respondentsfrom12 European countries,includingSlovakia, plusres-identsof theUSAand Tur-key. Itwasfocusedon the

relationship betweenEuropeandthe USA, thesituationin NorthAfrica,

Afghanistan andIraq, andon theeconomy.

US Ambassadorto Slov-akiaTheodore Sedgwick saidhebelievesthatsupport forObamain Slovakiais still big.He considersthe weakening

Americaneconomyto beoneofthe factors that mighthave causedthedropinObamaspopularity.

The surveyalso showedthat only 38percent ofSlov-aks supportthe Europeanfinancialstabilitymechan-isms.On theother hand,moreSlovaks stillconsidertheeuroto bebeneficialratherthan harmful.

Two candidates emergefor ombudsman job

THE RULING coalition doesnotseemto have learnedfromthe difficulties caused by itsfailure to agree on a joint can-didate for the general prosec-utor job, with two rival can-didates now emerging to fillone of the next big state jobsthat will need to be decided incoming months.

This time around, theproblems are not expected to

beas damaging asthosein the

general prosecutor selectionprocess proved to be becausethe office of the ombudsmanhas fewer powersand is muchless politically exposed. Apartfrom the ombudsman, par-liament will also need to re-place the heads of the Statist-ics Office, the Anti-Monopoly

Authority, and the Public Pro-curement Office(VO).

The new ombudsmanshould be selected by March2012, when the term of the cur-rent ombudsman, PavelKandr, elapses. Parliament islikelyto hold a vote onthe mat-terin January.

After initial talks held in

early September, the leadingcandidateto head theOffice ofthe Public Defender of Rights,as the ombudsman is officialknown, appears to be JanaDubovcov, a former judgeand critic of the Slovak judi-cial system under tefan Ha-

rabin. Prior to last years par-liamentary elections she shedher judges robes and waselected as an MP for the Slov-ak Democratic and ChristianUnion (SDK). The party hasnow informally proposed heras its candidate for the post,and Freedom and Solidarity(SaS) leader Richard Sulk hassaid his party will definitelyendorse herfor thepost.

Iwould liketo run forthepost only ifI getthe supportofall the coalition parties, and I

would even like to receive thesupport of the opposition,Dubovcov said on public-service Slovak Radio. She alsoadmitted that she had wanted

to head the office ever since it was created in Slovakia, butnoted that she had not re-ceived an official offer fromtheSDKyet.

If she eventually runs forthe post, Dubovcov is likelyto face a challenger in thepar-liamentaryvote.

SeeJOBpg5

BYMICHAELA

TERENZANI

Spectatorstaff

EURO: Radiov stresses stability goalContinuedfrompg1

A very hot political issue which is

even being linked with the continuationof this government is how Radiov de-scribed the debate around the changes tothe EFSF and the creation of the ESM onSeptember 22, during a conversation

with the president of the EuropeanCouncil, Herman Van Rompuy.However, she also stressed that for herthe stability of the ruling coalition is apriority, SITAnewswire reported.

If they want to have it approved,they should negotiate with Smer, Sulktold his ruling coalition colleagues,among whom there has been disagree-ment about the wisdom of linking any

voteto thefateof thegovernment.Opposition Smer party boss Robert

Fico predicted that the governmentwould not break up, and dismissed thedispute as just a game in which each of

thepartieswantsto appealto a particularsection of society.One section isfor theEFSF,the other

is against, Fico said on September 21, asquoted by the TASR newswire. Every-

body is looking for their place with thevoters.

Fico, who has made his support forthe bailout mechanism conditionalon allthe ruling coalition parties also support-ing it or else on the approval of a lawpermitting an early parliamentary elec-tion said that the ruling coalitionparties would in the end come to somesortof agreement.

Political scientist Miroslav Kus,however, told The Slovak Spectator thatFico isplaying games aswelland that heis under pressure from the European So-cialists, who are unambiguously in fa-

vourof the bailout mechanism.Fico would have big problems withthe European Socialists if Slovakia, dueto his attitude, becomes the only coun-try which rejects the bailout scheme,Kus said, adding that Fico still has a

chance to save Slovakias image over theeurozoneb ailout.

TheEuropean Unionstilldoes notbe-lieve that Slovakia might say no to thechanges, said MP Radoslav Prochzkafrom the Christian Democratic Move-ment (KDH) after meeting representat-ives of the European Central Bank andEuropean Commission at a conference inRome onSeptember21, SITA reported.

The notion that in the case of thecollapse of the eurozone we will be ableto continue to borrow at the interestrates that apply today and thatour banks

will come out from the whole thing without a scratch is beyond commonsense and totally ignores not only geo-political but also basic economic reality,Prochzka said.

He said that rejecting the bailoutwould turn the clock back ten years forSlovakia, to the time when the country

was climbing out of the black hole into which the governments of VladimrMeiarhad manoeuvredthe country.

SaS strongly opposes the idea of link-ing ratification to a confidence vote inthe government, and Sulk on September

20 said he could not envisage a situationin which Radiov would opt for thismove and thus contribute to the returnofa Fico government.

One year ago our partners gained amandate because they said they did not

want to rule with Fico, Sulk said, asquoted by SITA. Today they are openingthe door to him. What is this all about?The bai lout isnt part of t hegovernments programme. It is our righttosay no.

Sulk also said that the discussion onthe bailout schemes is not being conduc-tedon pragmatic grounds.

Miklo, who insists that the votesshouldbe linked, said that theattitude ofSaS is in fact an expression of distrusttowards Radiov, who at the negoti-ation between eurozone leaders suppor-

ted the changes agreed. He described theSaS attitude as populism because it iden-tifies with an idea that appeals to voters

without considering the potentiallygrave effects that it might have on Slov-akia,SITA reported.

Miklo said he expects Slovak MPs tovoteon thebailoutby October 11.

Kus opined that the desire to wieldpower is the strongest factor, and onethat might still unite the coalition,adding that if it wants to rule until theend of this election term it will have todo so at the expense of painful com-promises.

This is one of those compromises,but similar issues will emerge again andagainand itwill bea test ofwhat theyareableto withstandbecause the alternativeis the fall of the coalition and the return

to power of Fico, who will then pick hisown coalition partners, Kus told TheSlovak Spectator. And it would not be amorally acceptablesolution for any partyof the current ruling coalition to enter acoalitionwith Fico.

OmbudsmanPavel Kandrwill soonleaveoffice. Photo:Sme

2 NEWSSeptember26 October 2, 2011

FinanceMinister IvanMiklo Photo:Sme


3/16

State seeks to blockonline gambling sites

BETTING enthusiasts mightsoon find it harder to win orlose money by playing onlinegames that are not licensed in

Slovakia. The Finance Min-istry is trying to push throughan amendment to the law ongambling that would blocksuch content from the inter-net for Slovak users, arguingits wants to protect local con-sumers. But exponents of afree internet see it as an at-temptto introducecensorshipofthe internetin Slovakia.

Introducing censorshipis an extreme solution, whichshould only be put in place ifeverything else fails, uborIllek from the Society forOpen Information Technolo-gies (SOIT), a non-profit civicassociation, said. Represent-atives of SOIT, which has be-

come the biggest critic of theproposed amendment, be-lieve that other measuresshould be tried first, ratherthan introducing regulationofthe internet.

The amendment to thelaw on gambling, submittedfor interdepartmental reviewon September 7, would orderinternet service providers(ISPs) to block the websites of

bookmakers and online gam-ing services that do not hold alicence in Slovakia. Accordingto the legislation, the Bratis-lava Tax Office would admin-ister a black list of websites

which ISPs would have to ob-serve. Theministryis advocat-

ing the measure in order toprotect Slovak consumers,preserve public order and re-spect other public interests,according to ministry spokes-person Patrcia Malecovepitkov.

Advocatesof unrestrictedinternetaccess

We believe that the onlyreal reason why the ministryis trying to introduce this le-gislation is to increase the in-come of the state from taxeson the providers of onlinegamblinggames,Illeksaid.

SOIT criticised severalpoints in the law, stressing

that the natureof the blockedcontent gambling sites isnot key to the debate, but theactual blocking of any con-tentandthe waytheministryisdoingitis.

One problematic point isthe practicability of the law,since, according to SOIT ex-perts, it is a technologicallytrivial thing even for non-ex-pert users to access websitesfrom any location and fromany IP address. This is thanks

tovarioustoolssuchastheTorProject, or the What Is My IPAddresswebsite,developed byresearchers from Oxford andCambridge Universities.These allow uncensored andunlimited access to the inter-net and the anonymisation ofthepersonaccessing it.

The expenses connectedwith blocking websites wouldbe borne by the ISPs, who inthe end would raise the pricesfor internet access paid byend-users, SOIT representat-ives argue. But the main prob-lem SOIT sees in the proposedamendment is that it disturbsthe current status quo vis-a-

vis blocking web content in

Slovakia. While at the mo-menta websitecan be blockedonly based on a court order,the amendment wants to au-thorisethe taxofficeto decide,andthe opportunityto protestor to defend oneself against ataxofficedecisionis limited.

InvolvingtheEU

One of the companies whose business could be af-fected by the amendment is

bet-at-home.com, registeredin Malta. Its spokesperson,Claus Retschitzegger, saidthat the proposed restrictiondoes not comp ly withEuropean law and discrimin-

ates against foreign compan-ies like bet-at-home.comwhen compared to companiesregistered in Slovakia.

That is the reason whyprobably no foreign online

company will apply for agambling licence in Slovakia,Retschitzeggertold The SlovakSpectator.

But lawyers have com-mented that the rulings of theEuropean Court of Justice(ECJ) in similar cases suggest

that the amendment wouldcomply withEU law.There are several rulings

of the ECJ according to whichthe amendment is alright,said lawyer Tom Kamenecin an interview with the Smedaily. Kamenec serves as anadvisor on gambling regula-tiontothe state-runTipos bet-ting company, for whom the

withdrawal of foreign online betting companies wouldmeanless competition.

Theproposed changes in-troduce limits to the free pro-

vision of services, which isnot in contradiction with theEU law or with the decision-making of the EuropeanCourt

of Justice, as long as the lim-its correspondwith reasons ofpublic interest such as con-sumer protection or the gen-eral need to keep publico rd er, the ministrysMalecov epitkov told TheSlovak Spectator.

Meanwhile, the FinanceMinistry has announced it

will submit the amendmentto the European Commission,in order to seek a statementabout whether it is compat-ible with EU regulations. Theministry has not done so yet,Malecov epitkov said onSeptember 21.

Its a cover-upmanoeuvre, Illek said,

adding that since regula-tion of gambling is not gov-erned at the Europe-widelevel, he expects that theEuropean Commission willnot interfere.

Criticalvoicesgrowinnumber

SOIT hassubmitteda col-lective response to the law, which will be available forinterdepartmental reviewuntil the end of September,

opposing the proposedchanges. The response had been signed by over 2,100supporters as of September21. SOIT has also been joined by the Association of LocalInternet Providers (ALPI),which warned that the pro-posed amendment wouldforce ISPs to start using cen-sorship facilities, creatingthe risk that in the futurethese couldbe abused.

As long as we are forcedto own and use such techno-logy, we would constantlyface the risk of the fast andeasy spread of censorshipfrom tax issues to others, which could prove a great

danger to the freedom ofhumankind in the currentcomplicated times, ALPIwrotein itsstatement.

Services connected withblocking websitesas orderedby the state could cost tensof millions of euros, accord-ing to the local internet providers, which would wellexceed any forecast tax rev-enues.

Jozef Viskupi, a member of the Ordinary Peoplefaction within the Freedomand Solidarity (SaS) parlia-mentary caucus, is the onlyMP so far to have joined theprotests against the pro-posedamendment.

It is not fortunate tosolve one negative phe-nomenon in society by in-troducing another negativephenomenon, Viskupisaid.

BYMICHAELA

TERENZANI

Spectatorstaff

Theidea ofblockinginternetacesssto gamblingsites hasraisedhackles.Photo:Sme - S.Smadiov

USA: 'We areproud of you'

Continuedfrompg1

Weareproud ofyou,Obamasaid, asquotedin a

press statementreleasedby SlovakiasGovernmentOffice.

Radiov saidthat moretransparency is onlyone ofthechallenges facing thegovernments of SlovakiaandtheUnited States, alongwithreducinghigh levels of un-employmentand takingef-fectivemeasuresin boththeUSand theeurozoneto pre-

ventseriousdamagefrom apotentialsecond-waveeco-nomiccrisis.

Themeetingof theOpenGovernment Partnership

wasthe firsthigh-levelas-sembly of representativesfromcountries which are

participating in thisinitiat-ive,focusedon internationalcooperationin areassuchastransparency, governmentresponsibility,citizensen-gagementand fightingcor-ruption. Thepartnership

wasestablishedby theUS,Brazil, Indonesia,Mexico,Norway, thePhilippines,SouthAfrica,the UnitedKingdom andseveralnon-governmentalorganisa-tions.Another38 countries,including Slovakia, formallyjoinedthe partnershipat theforumin NewYork City.

Asa memberofthe part-nership, theSlovak govern-mentwill design an action

plan byMarch2012 that willbindthe country topass fur-therreformsto increasetransparency in public ad-ministration, fightcorrup-tionand cronyism,and

widen thescope of publiccontrol,the GovernmentOf-ficestated.Slovakiawillformallypresentits planatthesecondsessionof theOpenGovernment Initiativethat will beheldin Brazilnextyear.

TheOpenGovernmentPartnership is an absolutelynatural andwelcomeinitiat-iveforme,fullyin accord

withthe programmestate-mentof thegovernment and

thesteps wehavetaken uptonow forexample, estab-lishing thecentralregistryof [government] contracts,Radiov stated, adding that

by participating in theiniti-

ativeSlovakiawillbe betterableto compare itselfagainst othercountries.

Duringhervisitto the

US,Radiovalso attendedasymposium,Road toProsperity, heldin theHar-

vardClubin New York onSeptember20, thatwas at-tended by 150businesslead-ers,financiers andother rep-resentatives of US compan-ies,the Slovak GovernmentOffice reported.

Slovakiais a countrythatis attractiveto foreigninvestors,whoseeconomyisstillgrowingin spiteof thecurrenteconomicsituationin theworld,Radiovsaid,accordingto a pressrelease

by heroffice.In herspeech,which

amongothertopics dealt

withthe Europeandebtcrisis, theprime ministerpointedoutthatthe mostdifficulttask of allgovern-mentsin thecurrenteco-nomicsituationis to restorecredibilityin theeyes ofthepublic andinvestors.

Radiov saidthe Slovakgovernmentis tryingtoachieve thisthroughseveralreformsintendedto increasethetransparencyof thestateadministration andjudi-ciary, andthroughausteritymeasuresfocusedon in-creasingcredibilityin theuseof publicmoney.She ad-dedthat an importantstepto improve thebusinessen-

vironmentin Slovakiawasthe recent parliamentaryapproval of an amendmenttothe LabourCode.

Onthe other hand,Radiov emphasisedthatthesuccessof Slovakiade-pendsnot only ondomesticreforms,but also ontheEuropean Unionfindingsolutions to the sovereigndebt crisis.

Duringher meetingwithrepresentatives ofSlovakcommunities fromseveralstatesof theUS, in-cludingFriendsof Slovakia,an organisationthat co-or-ganisedthemeeting inNewYork onSeptember21,the

primeminister praised thefactthat eventhird-genera-tion immigrantsfrom Slov-akia still speakSlovak andmaintain theirties withSlovakculture.

USPresidentBarack Obama speaks ata lunchhostedby theUN Secretary-General. Photo:SITA

3September26 October 2, 2011NEWS

Proposedamendmentsparksheated

discussion about

internetcensorship


4/16

Newairline enters Slovakmarket

A NEWpassenger airline,SlovakianAirlines,enteredthelocal market inan ori-ginalwayin September bynamingitsfirstplane,a Boe-ing737-500,afterMilan Ras-tislavtefnik, oneof thefoundersof independent

Czechoslovakia, theHospodrskeNovinydailyreported.

Weexpectto beginfly-ingby December15, saidArnold Medzihradsk,the

chiefexecutiveof SlovakianAirlines,as quoted by theTASR newswire.

Thefirst flightsshouldconnect Bratislavawith Eng-land,Italy,Spain andRussia,andthere areongoingtalksaboutfurtherdestinations.

Thecarrier does notwanttoflyto destinations thatarealreadyservedby otherair-lines.


SARIO seeks new investors

THESLOVAKInvestmentandTrade DevelopmentAgency (SARIO) presentedSlovakia as an investmentdestinationin Germany via aseries of investmentsem-inarsand individualmeet-ingsheld in midSeptember,theSITA newswirereported.

Wewouldliketopresent Slovakiaas a countrysuitablenot onlyfor indus-trialproduction butalso forinvestmentsin researchand

development,said theheadof SARIO, Rbert imoni,asquoted bySITA.

Seminarswithin theproject Business FriendlySlovakiaheld in GermanyfromSeptember 19 toSeptember23 werealso at-

tended by Economy MinisterJurajMikovand represent-ativesof foreigncompanies

which havealreadyestab-lished facilitiesin Slovakia.

Duringthe seminars,heldin theGermancityofDsseldorf,Mikovex-plainedto Japaneseinvestorswhy Slovakiais a goodin-vestmentdestination.

Ifwe realisethat Japanisone ofthemost technolo-gicallydeveloped andone of

themost sophisticated coun-triesin theworld,which still

belongsto thestrongestworld economies,it is essen-tialfor Slovakiato improveits economicrelationswithJapan, Mikov said,asquoted by SITA.

Opening of R1 section postponed

THOUGH thenew dualcar-riagewaybetweenNitraand

TekovskNemce,builtthrough a public-privatepartnership (PPP) project,hasbeen finished,cars arenotyetallowedto useit,andtheMinistryof Transporthasannouncedthe dateof open-inghashadto bepostponed,theSme dailyreported.

The concessionaire,Granvia,has notprovidedallthe requireddocumentationtothe ministry,so thenewexpresswaycannotbeopened on September28,explainedthe ministry, asquoted by Sme.

Granvia representativespromisedto finishthe doc-umentationassoon aspos-

sible.Togetherwiththe inde-pendentcontroller andpub-licprocurerwe arefinishingtheprocessof finalisingthe

documentation forabout 500constructedobjectswithin

theconditionsof thecon-tractsignedbetweentheconcessionaireand theministry,Granviachief ex-ecutive EricDelobel said,asquotedby theSITAnews-

wire.Thepostponement of the

opening of thenew sectionsofthe R1,which will com-pletethe multi-laneroute

betweenBratislava andBansk Bystrica,was criti-cisedby oppositionSmerpartyleader RobertFicoas ascandal,the TASRnewswirereported.

TheSlovakgovernmenthas absolutely underestim-ated theextentof this con-

struction,whichrequiresconsiderably greatercooper-ationbetweenthe statebod-iesandthosewhobuilt it,Fico said,as quotedbyTASR.

Jobless rate falls slightlyTHE UNEMPLOYMENT ratein August wascalculated at13.12percent, representing amonth-on-month dropof0.03percentagepoints. InAugust 2010the jobless ratestoodat 12.19percent, theTASRnewswire reported.

In August labour officesregistered 384,200people asunemployed. If thejoblessratewere to includepeople

whoare not immediatelyavailablefor work, suchas

thoseon sick-leaveor livingabroad, thefigurewouldhavereached14.4 percent,or0.08percentagepoints lessthan inJune.

Thehighestunemploy-mentrate, 19.13percent, wasreportedin Bansk BystricaRegion, while in BratislavaRegion, which traditionallyhasthelowestnumber ofjobless people, only5.42 per-

centof people wererecordedas unemployed.

Thinking green,building smart

GLOBAL warming caused bygreenhouse gases released bythe burning of fossil fuels forpower generation has be-come an issue in architec-ture. Architects no longerconsider only how buildingslook and how they meet theirfunctional requirements, butalso take into account theirenvironmental impact. Sus-tainable architecture seeks tominimise the negative im-pacts of buildings on the en-

vironment and to drawatten-

tion to the importance ofhealthier and more sustain-able communities. To pursuethese aims, Slovakia parti-cipated for the first time inthe annual World Green

B uil din g Week i n mi dSeptember.

Slovakia is holding this

event for the first time and we hope that this will be-come a tradition and an op-portunity to disseminate in-formation and strengthenknowledge about sustainable

building and green houses inSlovakia, said VladimraBukerov, the head of the

Slovak Green Building Coun-cil (SKGBC), at the openingeventon September 19.

World Green BuildingWeek in Slovakiawas suppor-ted by mayors Milan Ftnik

and Richard Rai from thecountrys two biggest cities,Bratislavaand Koice respect-ively, by thechief architectofBratislava City Council, theFaculty of Architecture at theSlovak University of Techno-logy in Bratislava, the Bratis-lava public transport com-pany and by individualmembersof SKGBC.

Ingrid Konrdov, thechief architect of Bratislavascity council, called for moregreenarchitecture inreal life.

20 years have elapsedsince the large social andeconomic change in thiscountry and we should real-ise the impact and import-

ance of ecology not only the-oretically, but also imple-ment it in practice, saidKonrdov.

SeeGREEN pg12

BYJANALIPTKOVSpectatorstaff

Ingrid Konrdov (left)and VladimraBukerov Photo: SKGBC

GAP: Banks want levy tenfold lowerContinuedfrom pg1

The special bank levy is one plank inthe governments plan to boost state rev-enues in response to lowered estimatesfor the countrys future economicgrowth: in early September the FinanceMinistrys Institute of Financial Policytrimmed its prognosis for economic

growth in 2012 from 4.4 percent to 3.4percent. The International MonetaryFund (IMF) has since predicted thatSlovakias GDP will grow by only 3.3 per-cent inboth2011and2012.

The Finance Ministry has been seek-ing additional revenue sources to cover ashortfall that is expected to reach 240million because of the lower economicgrowth. The ministry has already de-cided to take 95 million from reserves ithad planned to create to help cover thegap,the Smedaily reported.

The government thinks it can get theremaining 145 million from threesources: the special bank levy; an earlierhike in excise taxes on cigarettes; andhigher fees paid by Slovensk Elektrrne,the electricity generator, to the NationalNuclear Fund. The ministry also assumes

some extra revenue may come from thesale of digital broadcast licences and bet-terfinancialresultsby somestate-ownedcompanies.

Today we concluded the debate onrevenue and now, during the upcoming

weeks, we will discuss the draft budgetand continue talking about spending,Finance Minister Ivan Miklo stated, asquoted by the SITA newswire, addingthat government ministries are still hop-ing to get 1.5 billion more than what isin his draft budget.

Miklo said keeping the countryspublic finance deficit at the proposedlevel of 3.8 percent for 2012 remains thegovernmentstop priority.

Thebanklevy

Thespecialbanklevywillbe basedona banks total liabilities, less the banksequitycapitaland thedeposits ithas thatare covered under Slovakias deposit pro-tection system. The cabinet passed thedraft legislation on September 21 and set

the rate for the special levy at 0.2 percentfor next year, the SITA newswire repor-ted. Smer has called for the rate to be setat 0.7 percent, arguing that it would

bringan extra189millionto thestate.The Slovak Banking Association

(SBA), however, said that it envisions arate of 0.02 percent, arguing that this

was the rate used in Germany, a country

that was forcedto shore up its banks dur-ingthe turmoil in thefinancialmarkets.The Finance Ministry stated that

even though the rate is higher in com-parison with other EU countries whichhave imposed such a levy,the levy wouldtake only 7.9 percent of last year's profitof the banking sector. The ministry ar-gued that the proposed rate is lowenough not to cause negative impacts,especially shifting the cost of the levy tocustomers through higher bank fees,SITAwrote.

In June the Slovak Banking Associ-ation stated that the rate proposedby theFinance Ministry would be the highestamong all the EU countries which havesuch a levy and that it is 10 times higherthan the levy in some countries of theEU. The SBA predicted that the levy will

get reflected in lower profitability for the banks but could also have potentiallynegative impacts on the stability of thesector.

Currently, no relevant reason existsin Slovakia for mandating the levy, theSBA wrote, adding that it is not timely

before final agreement is reached overthe elements of the so-called system forcrisis management of the European

banking system. The SBA continued thatSlovakia did not have to rescue its bank-ing sector, which was one of the reasonsfor instituting the levies in some of theotherEU countries.

Banks paid 266.90 million in directand indirect taxes to the state in 2010,the SBA reported on April 26, of which173.40 million was from income tax andthe rest came from indirect taxes and

VAT.This money ends up in the state budget as available income, LadislavUnovsk, the SBAs executive director,told the TASR newswire. The higher thesector's profits, the more taxes we pay

into the budget. So, we don't understandFinance Minister Ivan Miklo's initiativeto introduce another special tax on

banks.After parliament approved the legis-

lation, the SBA objected that the lawlacked a specific single-purpose fund toreceive the levy as well as clear rules forhow the funds would be used, TASR

wrote on September21.The bankers association stated thatit is ironic that the Slovak governmentreferred to the European Commissionsproposal on bank crisis management inits rationale for the levy, saying that ac-cording to the European Central Bank(ECB), any such legislation should spe-cifically exclude the possibility of usingthe funds from a bank levy for any pur-pose other than tackling crisis situationsin thebankingsector,TASR wrote.

Cigarettestocostmore

Smokers will soon pay more for theircigarettes if parliament approves thecabinets proposal to increase the excisetax in February 2012, rather than inMarch 2013 as originally planned. That

specific tax would increase from 55.70to 59 per 1,000 cigarettes with the min-imum overall tax rate rising from 85 to90per 1000cigarettes.

The draft on the cigarette excise taxdoes not currently have the support of allMPs from the ruling coalition, especiallythose members who have said they willoppose all tax hikes, but MP Jozef Kollr,the chair of the Freedom and Solidarity(SaS) partys parliamentary caucus,commented that as far as cigarettes arespecifically concerned, SaS will not haveany fundamental problem with that,the TASR newswire wrote. Kollr addedthat Slovakia is applying one of the EUsdirectives, albeit one year earlier thanrequired.

Deputies from the Civil ConservativeParty (OKS) who came to parliament on

the Most-Hd slate said they are open todiscussing the excise tax hike on cigar-ettes.

But OKS also has said that it wouldpresent proposals for further savings inpublic expenditures.

4 BUSINESS / NEWSSeptember26 October 2, 2011


5/16

SND

SLOVAKS seem to be no bigfans of acronyms. If you seeone, it likely bears the nameof a public institution, politic-al party, or a foreign firm. Inthe first category, there isRTVS (the public broadcaster),NR SR (the parliament), FNM(the National Property Fund),SIS (the Slovak intelligenceservice), NK (the Supreme

Audit Office), PN (theNations Memory Institute),SPP (the national gas com-pany), and the list could go on

and on. In the second groupyou have the KDH (the Chris-tian Democratic Movement),SDK (the Slovak Democraticand Christian Union), SaS(Freedom and Solidarity), andSNS (the Slovak NationalParty). And in the last groupyou will find the usual mix ofHBO, KFC, andING.

Rather than opting forsomething in the style of NBCor ABC, local private mediachoose names such asMarkza and Joj (the main TVstations), Expres and Fun (themost popular radio stations),

or Nov as, Sme, and Pravda

(the main newspapers). EvenVB, which initially stood forGeneralLoans Bank,inheritedits name from the time whenit was a state-run company,and no longer uses the full-lengthversion.

So if there is a newspapertitle containing an acronym

you dont immediately recog-nise as a global brand or thename of a political party, youcan be pretty sure of twothings that it is about a pub-lic organisation, and that theorganisationis in some sort oftrouble. The SND (Slovak Na-

tional Theatre) is no excep-tion. Its fourth director in fiveyears is leaving after 500 daysin office, following allegationsof wasteful spending. His de-parture is starting a newround of debate about thepurpose and vision of the or-ganisation, whether the newhead should be a manager, anartist, or a little bit of both,

whether the drama, ballet,and opera sections shouldhave complete independenceor form three pillars of an in-tegral part. Its all been dis-cussed before, and it will re-turn again. Similar topics arecharacteristic of the discus-sions about RTVS should

public television and radio bemerged or separated? Whydoes so much money get lost?

What functions should themediaserve?

Public universities, whether its UK (ComeniusUniversity), STU (Slovak Uni-

versity of Technology), or EU(University of Economics),have a good share of their owntrouble.

Slovakia doesnt havemany examples of well-func-tioning public institutions.Instead, many of them areSmallNationalDisasters.

JOB: Several senior posts open in 2012Continuedfrompg2The four MPs of the Civic

DemocraticParty (OKS),a par-liamentary faction which sitsas part of the Most-Hdcaucus, have already an-nounced they plan to endorseanother candidate FrantiekMikloko, a former dissident,MP and presidential candid-ate who for most of his careerwas a prominent member ofthe Christian DemocraticMovement (KDH).

He is a man for whomjustice isthe highest[goal]thatexists in life, OKS head Peter

Zajac said, as quoted by SlovakRadio, adding that he and hisfellow party members believeMiklokois thebest candidate.

However, some observershave dismissed the choice of

Mikloko as a candidate, ar-guingthat theoffice shouldbeheadedby a legalexpert.

Slovakiasfirst ombudsmanpreparesto leave

Slovakia has had only oneombudsman to date. PavelKandr will leave office inMarch 2012 after serving twoterms since he was first selec-ted for the post in 2002, underthe Mikul Dzurinda govern-ment.He ranin the2002secret

vote as a candidate proposed by the opposition Movementfor a Democratic Slovakia

(HZDS) of Vladimr Meiar. In2007, he was confirmed in thepost with support from thethen-governing coalition ofSmer, the Slovak NationalParty(SNS)and HZDS.

In 2012, the vote by MPsshould be held in public forthe first time, after the par-liamentary rules applying toselection of candidates forsenior public positions werechanged in the wake of diffi-culties experienced selectinga newgeneralprosecutor.

Kandrs activity asombudsman has been criti-cised by several human-rights activists and organ-isations.

I dont think citizenshave felt theyve had sup-port when solving problems

with the state administra-

tion, or that anything hasimproved significantly,said arlota Pufflerov fromOban a demokracia, a non-governmental organisation,asquoted by theSmedaily.

In the past year, Kandrhas mainly been dealing withunjustified delays in judicialand administrative processes,Sme reported. Of the 2,517 mo-tions his office has receivedover the past 12 months, ac-cording to his activity reportfrom May 2011, as many as 64percent were not correctly ad-dressed to him. He has provedin 176 cases that state offices

violated the basic rights andfreedoms of citizens, with 145of those concerning unjusti-fieddelays,Sme reported.

Smealso noted thatKandrhad rejected a complaint from

the Slovak Journalists Syndic-ate to have the controversial2008 Press Code, passed by theprevious government led byRobert Fico, reviewed by theConstitutional Court.

Harabins hydraPEOPLE opt to work fromhome when they need to bal-ance their parenting and

working duties when theyhave small children. Institu-tions or businesses ask theiremployees to work from

home when they need to savemoney on office rental by cre-ating shared workstations. Ofcourse, people choose to workfrom the comfort or discom-fort of their own homes vol-untarily or involuntarily for

various reasons, and doubt-less Supreme Court presidenttefan Harabin has his ownlist of reasons for wanting torun the countrys key judicialinstitutionfrom home.

One proffered justifica-tion for Harabins desire to

work from home two days aweek, or at least the explana-tion which his office chose toshare with the public, is thathe is the chairman and a

member of the appeal senate, which decides on the mostserious penal cases such asmurders, life sentences andorganised crime, and wouldthus presumably benefit fromconsidering them in morecomfortable surroundings.

Harabin has once againtaken his critics aback, des-pite consistently exceedingtheir worst expectations andconducting his tenure ofSlovakias most senior judi-cial positions as a kind oflong-running farce.

The Judicial Council con-sented meekly to Harabins re-quest,with the onlydissenting

voice coming from Miroslav

Gavalec, often described by thelocal media as a critic of Hara- bin. Gavalec, while admittingthat Harabin is also a judge,also suggested that he found ithard to imagine how the bossof the Supreme Court couldmanage the institution fromhome, especially at a time

when the Supreme Court stilldoes not have a vice president,the SITA newswire reported,citing the minutes of thecouncilssitting.

Most probably, Harabinsrequest to work from home

was not prompted by a sudden

surge of autumn melancholy.It comes at a time when Hara-

bin should be paid 70 percentless than his normal salary, incompliance with a disciplin-ary punishment imposed onhim in July by the Constitu-

tional Court for repeatedly blocking Finance Ministry

auditors from checking the ac-countsof theSupremeCourt.

Pessimists would say thatthe Supreme Court boss man-aging what, under ideal con-ditions, should be the ivorytower of justice from his sofaat home only confirms whathas been known for ages: thatsomething is seriously rottenin the state of Slovakias judi-ciary. Optimists might in-stead jokingly suggest thatthe absence of Harabin at theSupreme Court might not besuch a bad thing after all.

Making his home into his of-fice certainly has a symbolicsignificance for Harabin andmany will interpret it as hisresponseto thefine.

In early September, Hara-bin called the decision of theConstitutional Court a hydraof arbitrariness and used di-

vorce as a metaphor to explainhiscase:Itis exactly thesameas if you are legally divorcedand the District Court inPreov as well as the regionalcourt and Supreme Court con-firm this but the Constitution-al court disciplinarily sen-

tences you upon a ministerialproposal for bigamy because itdid not respect the legal de-cision of the district and re-gional court and would saythat you as a judge behaved inan undignified manner, Ha-

rabin said, as quoted by SITA.He was referring to a decisionby a Bratislava district court,which was later confirmed byhis own Supreme Court, sug-gesting that the Finance Min-istry could not audit the Su-preme Court. Harabin did notrespond to queries about

whether his request to workfrom home was linked to hispunishment, which accord-ing to Sme will cut his pay by3,500a month.Recently,theMovement for a DemocraticSlovakia (HZDS),in its regulartalks with leader VladimrMeiar in fact a self-conduc-ted interview by the HZDS

boss and former prime minis-

ter which the SITA newswirenow runs on three pages aspaid content spoke in greatlengthin defenceof Harabin.

And even though the rel-evance of Meiars thoughts,in terms of any serious dis-course, is close to zero, theyshow that Harabin at the Su-preme Court represents thelegacy that Meiar left be-hind. Voters barred the doorsof parliament to Meiar in2010, by refusing to vote forthe HZDS in sufficient num-

bers to pass the threshold forentry, but they cannot do thesame to Harabin at the Su-premeCourt.

Meiar was restored to a

position of influence byRobert Fico, who picked hisHZDS toco-rulethecountry in2006.Harabinnow lingers asaliving reminder to everyone

who doubts the ability of cer-tain politicians to direct thecountrys affairs that it is of-ten not the politicians them-selves who cause the mostharm, but the actions of theirunrestrained cronies. Societyis forced to live with their

baleful influence for muchlonger and does not have theoptionof workingfrom hometoavoidit.

5September26 October 2, 2011OPINION / NEWS

QUOTEOFTHEWEEK:MrBakais a dunce,as only a duncecould step outinfrontofjournalistsandaskme toexplainwhywemade anair showcheaperand moretransparentthanhe did.

DefenceMinisterubomrGalkoreactsto criticismfromhis ministerialpredecessor

SLOVAKWORDOFTHEWEEK

EDITORIAL


BYLUKFILASpecial to the Spectator

Ondrejoth steppeddownasheadof theSNDafteranauditrevealedfinancialproblems. Photo:Sme

The Slovak Spectator i s an independent newspaper published every Monday by The Rock, s .r .o .Subscriptions: Inquiries should be made to The Slovak Spectatorsbusiness office at (+421-2) 59 233 300.Printing: Petit Press a.s. Distribution: Interpress Slovakia s.r.o., Mediaprint-kapa s.r.o., Slovensk pota a.s.Mal Distribution: ABOPRESS. EV 544/08. 2010 The Rock, s.r.o. All rights reserved. Any reproductionin whole or in part without permission is prohibited by law. The authors of articles published in this issue,represented by the publisher, reserve the right to give their approval for reproducing and public transmission

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is the responsibility of the advertiser and is not a written or implied sponsorship, endorsement or investigation of suchcommercial enterprises or ventures by The Slovak Spectatoror The Rock s.r.o. ISSN 1335-9843.Address: The Rock, s.r.o., Lazaretsk 12, 811 08 Bratislava. O:313 86 237.

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6/16

Tax revenues lag behind plan

SLOVAKIA collectedless revenue fromvarious kindsof

taxesduringthefirstsevenmonthsof theyearthanithadplanned. Butthegap betweenplannedandactual taxrevenues has beennarrowed.While actual tax revenue

was more than 12percent less than planned inMay,thatnarrowed to6.4 percentin June andin July Slovakiacollectedtax revenue thatwas only3.98 percentbelowtheplannedamount.Totaltaxrevenue flowing tothestateover thefirstsevenmonthsof 2011 amountedto4.9billion,the SITAnewswire reported.Taxescollectedon theincomes of individuals reached886.1 million,only 85 percentof the planned amountthrough July.The statecollected968.7millioninincometaxes fromcorporations, reaching 99.3percent ofthe projected amount through July.Collection ofvarious kindsof taxes ongoodsandservicesin thefirst sevenmonths totalled 3.808 billion,3.3percentbelow the plan,with abouttwo-thirds, 2.682

billion,coming fromvalue addedtax andhitting 98.51percentof the planned amount. Excisetax revenuecame to1.126 billion or92.56percentof theplanned

amount.Slovakiastax andcustomsoffices are expected to collectstaterevenue totalling 8.787 billion in 2011.Last yearthe statecollected7.962billion,0.8 percentless thanin2009.


Tax-related information on the web

There area numberof internet-based sources whereindividuals andcorporations canfind detailed andup-to-dateinformationabouttaxes in Slovakia andsomesitesare inthe English language.

A number of consultancy companies suchas KPMG,Ernst& Young,Deloitte, andPwC regularlypublish

bulletinswith updated tax informationand thesefirmspublish theirdocumentsin English as well.Likewise,thereare a numberof lawfirmspublishingextensive

tax-relatedinformationin English.

Additionalwebsiteswith tax-relatedinformationonlyin Slovak include:www.zbierka.sk the electronicversion of SlovakiasCollectionsof Laws.www.uad.sk - tovnctvoa dane(Accounting andTaxes)billsitselfas thelargeston-linelibrary oftaxandaccountinginformation availablein Slovakia.www.dane.sk this website ishostedbyDaovreformaa spoloenskrozvoj (TaxReform andSocialDevelopment), a civicassociation,but the mostrecentnewsonthe websitedatesbackto October 2009.

Primary kinds of taxes in Slovakia

Valueadded tax (VAT)ThebasicVATrateis 20percent

TheVAT rate onbooksandmedicinesis 10percent

Income taxThe incometax for individuals andcorporationsisa flat 19percent

Tax-related institutions in Slovakia

FinanceMinistryMinister of Finance: IvanMiklo

www.finance.gov.sk

TaxDirectorateof theSlovakRepublicwww.drsr.sk

SlovakChamberof TaxAdvisorswww.skdp.sk

Slovakia objects to EUtax harmonisation plan

THE THEME of harmonisa-tion of taxes across theEuropean Union has surfacedregularly, but as yet withoutany obvious success. Now theEuropeanCommissionhasar-rived at a proposal for a com-mon system for calculatingthe tax base of businesses op-erating in the EU. Eventhough some have expressedqualified support for aspectsof theplan,the generalstanceinSlovakiaisnegative.

Taxesare a spherewhich,in our opinion, must remain

in the hands of countries,said Prime Minister IvetaRadiov as quoted by theSITA newswire, adding that ifa country does not havean in-dependent currency, taxpolicy is the only significanteconomictoolitcontrols.

In mid March theEuropean Commission pro-posed a common system forcalculating the tax base ofbusinesses operating in theEU, aiming to significantlyreduce the administrativeburden,compliance costs andlegal uncertainties that busi-nesses in the EU currentlyface inhavingto complywithup to27 differentnationalsys-

tems for determining theirtaxableprofits.AstheEUstatesonitsweb-

site, the proposed CommonConsolidated Corporate TaxBase (CCCTB), would meanthat companies would benefitfrom a one-stop-shop systemfor filing their tax returns andwouldbeabletoconsolidateallthe profits and losses they in-cur across the EU. Memberstates would maintain theirfull sovereignrightto settheirowncorporatetaxrate.

The EC estimates that theCCCTB would save businessesacross the EU 700 million inreduced compliancecosts,and1.3billionthroughconsolida-

tion each year. In addition,businesses looking to expandcross-border would benefitfrom up to 1 billion in sav-ings. The EC believes that theCCCTBwouldalsomaketheEU

a much more attractive mar-ketforforeigninvestors.

The CCCTB will make iteasier, cheaper and more con-

venient to do business in theEU, said Algirdas emeta,commissioner for taxation,

customs,anti-fraudand audit,as cited in an EC press release.It will also open doors forsmall and medium-sized busi-nesseslookingto grow beyondtheir domestic market.Todays proposal is good for

businessandgoodfortheglob-alcompetitivenessoftheEU.

The CCCTB would be op-tional only for companies.This means those that feelthey would benefit from aharmonised EU system couldopt in, while other companiescouldcontinue to work withintheirnationalsystems.

The proposal is attractinga mixed response across theEuropean Union, with nine

countries, including Slovakia,already announcing that theydisagree with it,SITOwroteinmidJuly,SITAwroteinJuly.

In Slovakia the only pub-lic institution to come out infavour is the central bank,

which said that Slovakiashould maintain the euro-zoneevenatthecostof deeperintegration.

Jozef Makch, the gov-ernor of the National Bank ofSlovakia (NBS), speaking at acabinet session on September7, opined that the euro cannotfunction without the creationof a fiscal union in the longrun and that the measures ad-opted so far are only short-

term solutions. Prime Minis-ter R adiov c on veyedMakchs words after the cab-inetsession,SITA wrote.

According to the NBS,Slovakia should try to remain

part of the monetary unioneven if this were to entailharmonisationoftaxes.

With regards to integra-tion tendencies within euro-zone countries it should be aneffort by Slovakia to remain

part of a bigger economicwhole also in the case of initi-atives to deepen economic in-tegration of the eurozone. Inthis respect it is possible to ex-pectstrengthening of econom-ic management of the euro-zone and harmonisation ofpolicies of member countriesalsoin thefieldof direct taxes,the central bank wrote in itsstatement, asquotedby SITA.

The Slovak governmentisrejectingwider integration atthe level of taxes for the time

being. Finance Minister IvanMiklo has restated this sev-eral times and Prime Minis-ter Radiov repeated afterthe cabinet session on

September 7 that taxes are asphere that must remain un-dernationalcontrol.

The Finance Ministry alsopointed out that the ECs pro-posal is at odds with thecabinets programme for itsfour-year term. In the partdedicated to taxes and leviesthat programme reads thatthegovernmentwill notagreeto European harmonisation inthefieldofincometaxes.

Even thougha certainde-greeof progress inworkon theCCCTB draft wasachievedandthe proposed system containselements in some parts thatare comparable with inter-state income tax systems im-

plemented in EU memberstates, theSlovak Republichasnot become confident aboutthe advantageousness of thisproject, the Finance Ministry

wrote,asquotedbySITA.

The Slovak Finance Min-istry is not convinced that

benefitsresultingfrom suchacommon system would ex-ceed the costs linked to itsimplementation and opera-tion. Simultaneously, it be-lieves that if the system wereto be implemented it wouldtendto benefitmemberstates

that are home to corporateheadquarters.Thus, we pursue an

opinion that risks linkedwith implementation of theCCCTB are bigger than thereal benefit and effects ofharmonisation of tax bases,the ministry wrote, asquotedbySITA.

The Committee onEuropeanAffairsof theSlovakParliament also respondednegatively. In May it adopteda reasoned opinion on theproposal stating why it con-siders that the draft in ques-tiondoes notcomplywith theprincipleof subsidiarity.

Ivan tefanec, the chair-

man of the committee, ex-plained to The Slovak Spec-tator that its main objectionisthe loss of internalcompet-itiveness within the EU,something that is an import-antspurtofuturegrowth.

Nor would the proposal bring a reduction inadministration, tefanecsaid. On the contrary it

would increase the adminis-trative burden because it

wouldnotbe obligatory. From27 taxsystems wewouldhave28 systems within the EU. Ingeneral it could endangereconomic growth and con-tribute in a negative way tothe flexibility of EU member

states to react to changingeconomic situations andbusinessenvironments.

tefanec pointed out thateven though the proposal hasnot obtained enough pointsfrom national parliaments toget a 'yellow card' to halt itsprogress it has generatedsignificantopposition.

tefanec saidtax harmon-isationwas unacceptable.

Harmonisation of directtaxes is not a good step andthus it is not acceptable forus, he said. This is not aquestion of negotiation butthe principles of the EUsoperation.

Radovan urana of the

Institute for Economic andSocial Studies (INESS) wel-comed the stance of the Fin-ance Ministry.

SeeBASEpg8

BY JANALIPTKOVSpectator staff

PrimeMinisterIvetaRadiovexpressedopposition. Photo:Sme

6

US COMMUNITY

Next issue:BUSINESS FOCUS

TAXES

September26 October 2, 2011

EC proposes

common systemfor calculating

businesses'

tax base

Parliament approves legisla-tionto unifyrevenuecollection

TaxFreedomDaycame earlierinSlovakiain 2011


7/16

Tax Freedom Day came earlier in 2011

TAXFreedomDay,the dayoftheyearonwhicha

countrystaxpayers havefin-ishedpaying theircumulat-ivetax obligations tothegovernment,came earlierinSlovakia in2011thanit didin2010.Tax FreedomDaywascelebratedonJune3, 2011,

whileit arrivedon June 7 in2010,the SITAnewswire

wrote,citingan analysispreparedbythe SlovakTax-payersAssociation andtheF.A.Hayek Foundation.

OnFriday (June3), Slov-ak taxpayers stopworkingforthe stateand startwork-ingto earnmoney forthemselves,Mat Povanc,the foundation'sdirector,announcedon June2.

The analysis foundthattheearlierTax FreedomDayin2011was dueto continu-ing economic growthandmeasures taken bythe gov-ernmentto consolidatepub-licfinances aswellas bythepresence ofa weekendthatreduced thenumberof daysworkingforthe state.Theorganisationsalso wrotethatthe shortest periodfor reach-

ingTax Freedom Dayin thehistory ofits trackingin

Slovakiawas in2008,whenthedayfellon May22.The Slovak Taxpayers As-

sociationand the F.A.HayekFoundationhave calculatedthedateof TaxFreedomDaysince1999basedon totalconsolidated expenditures

bythepublic sectoras a per-centage ofGDP.

The F.A.Hayek Founda-tionalso publishesa calcula-tion each year showing the

burdenof taxesand leviesonanemployeeandwrotethatan employee withaverageincomein 2011 will receiveonly 0.48fromeacheurotheemployeris payingforhisorherwork.

Freedom andSolidarity(SaS)party,a memberof thefour-partyruling coalition,said inreactionto TaxFree-domDaycoming onJune3that itexpects thedaywillmove closerto thebeginningofthe year.But Povancnotedthatit couldalsocomelater,pointingto theriskofhighertaxes.


Firms object todisparities in local taxes

EARLIER this year the busi-ness sector complained to thegovernment aboutthe unevenburden of local taxes imposedon businesses, arguing that ithas a negative effect on thebusiness environment. A sub-

sequent analysisconductedbythe Finance Ministry compar-ing revenue and rates of realestate taxes concluded thatthe business sector is indeedburdened more than the gen-eral population. To addressthis issue, the ministry pre-pared a revision to the lawwhich parliament passed forfurther consideration. Thebusiness sector as well as mu-nicipalities will now have towait for the final wording ofthe revision to see what im-pactsitwillhave.

The National Union ofEmployers (RZ) has pointedout thatin somemunicipalit-ies and self-governing re-

gions significant inequalitiesin terms of real estate taxeshave developed betweenprivate individuals and cor-porateentities.

Since a business subjectcan be either a legal or aprivate entity we believethat this is leading to legalentities being put at a disad-vantage and deforming thecompetitive and businessenvironment, the RZwrote in a press release onApril1. It saidit believed thatthe government should focuson reducing the financial,administrative and regulat-ory burden placed on busi-nesses by municipalities and

self-governingregions.In response to a requestbytheRZ, theFinance Ministryconducted an analysis of thetax burden placed on busi-nesses by local taxes and fees.This comparison of revenueand rates of real estate taxesconcluded that the businesssector is burdened more thanthegeneralpopulation.

The ministryexplained inits paper that local taxes are:governed by the law on localtaxes and the local fee formunicipal waste and smallconstruction waste; have afacultative character; andthatindividualtownsand vil-lages and self-governing re-

gions can decide on their im-position and collection ac-cording to their own condi-tions. The only exception isthe local fee for municipalwaste and small construction

waste, which municipalitiesareobligedtocollect.

The lawsetsninekindsoflocal taxes and one local fee,states the ministry paper.Basedon theconcept of fiscaldecentralisation, whose es-sence lays in independenceand responsibility of muni-cipalities and self-governingregions and in securing theposition of municipalities, itsimultaneously authorisesmunicipalities to set the ratesof local taxes, reduce taxes, as

well as exempt entities frompaymentofthesetaxes.

Depending on the kind of

tax, thelawsets limitson howfar municipalities can changecertain rates or reduce or ex-emptsubjectsfrompayment.

The principles of the im-plemented fiscal decentralisa-tion bestow competencies

withregards tolocaltaxesandthe one fee on municipalitiesand self-governing regions,the paper states, adding thatthe Finance Ministry cannotinterfere in this other than byrevisingtheapplicablelaw.

The ministrys analysisshowed that real estate taxesmake upthe biggestportionofaggregate local taxes collec-ted. In 2010 the share was 63percent,followedbythefeefor

municipalwaste, whichmadeup about 30 percent of totalrevenues. The analysisshowed that taxpayers carry-ing out business activities ac-countformorethanonehalfofall revenues of municipalitiescomingfromrealestatetaxes.

By comparing revenuesfrom taxes on buildings in se-lected municipalities the Fin-ance Ministry found that

while fiscal decentralisation was intended to strengthenthe position and independ-ence of municipalities whendeciding on matters related toself-administration, the dis-proportion observed in prop-erty taxes indicated that the

principles of fiscal decentral-isation had not been correctlyunderstood. One result of this

was the notably higher taxesof buildings used for purposeslike agriculture, industry and

other money-making activit-ies compared to land and res-identialproperty.

The conclusion drawnfrom the comparison of rev-enues and rates of taxationimposed on land, buildingsand apartments was that the

business sector is burdenedmore than thegeneral popula-tion.

The Finance Ministry re-cognises this situation and

will prepare in a short periodof time proposals to addressthissituationwhichwill elim-inatethese deformations, theFinance Ministry concluded

itsreport.The ministry proposedsolutions in its draft revisionto the law on local taxes andthe local fee for municipal

waste and small constructionwaste, which parliament ad- vanced for further considera-tion on September7. Inpartic-ular, the intention is to re-move inequitable applicationof some regulationsin the lawinpractice,aswellastoreducethe administrative burden oftaxpayers as well as tax ad-ministrators by removing

various announcement andnotification duties.

For example, the revi-sion reduces the number of

types of land from nine toeight and further limits thescope within which sometaxratescanbeset.

The RZ is not the onlyemployers associationwhich regards local taxes onthe business sector as farfromideal.

Branislav Masr, the ex-ecutive director of the Fed-eration of Employers Asso-ciations ofthe SlovakRepub-lic (AZZZ) told The SlovakSpectator that the burden oflocal taxes falls unevenly,evenunfairly.

There are cases of muni-cipalities that impose excess-ively higher taxes compared

with other villages or com-pared with taxes for the sametaxed item owned by a non-

business subject, Masrstated. Thisis takingplaceonthe basis of a law which en-

abled such a burden in somecases, an extreme burden tobeplacedon doingbusiness.

According to Masr, thisleads to negative impacts onthe business environmentand in the end to liquidationof businesses and work-places in those municipalit-iesandregions.

The AZZZ particularly ob-jected to the taxation of landused for agricultural or recre-ational purposes where, logic-ally, large pieces of land arenecessary and are often used

bycitizens of themunicipalityfree of charge. The federationsays tax rates on motor

vehicles are also problematic

because each self-governingregion can set a different rate,which puts road transport op-erators at an advantage or dis-advantage depending on

which region they are basedin, even though they all usethesame roadinfrastructure.

The AZZZ positively per-ceives the current actions ofthe Finance Ministry, eventhough it can, Masr said,imagine a slightly more fa-

vourable change for the busi-nesssector.

Nevertheless, the draft isa step in the right direction,said Masr, who suggestedsome additional ways to im-prove the situation of busi-

nesses.Apart from continuingto eliminate excessive taxrates, he proposes cappingrates as well asoverall taxrev-enue, and suggests that the

benefits whichbusinessactiv-ities bring a municipality betaken into consideration

whensetting taxrates. Incaseof motor vehicles taxes heproposes implementing a sys-temwhichwould takeintoac-count the quality of the localroad infrastructure and howintensivelyit isused.

The Association of Townsand Villages of Slovakia(ZMOS) sees local taxes as asignificant part of the tax in-come that funds the activities

ofmunicipalities.Each municipality takesinto consideration the realfinancial possibilities of tax-payers and is searching for acompromise between the in-come needs of the municipal-ity and the possibilities ofpayers, ZMOS spokespersonMichal Kalik told The Slov-ak Spectator. We are afraidthat changing the parametersof local taxes could severelycurtail theirindependence.

Here Kalik pointed outthat a hike in the lowest taxrate on real estate will auto-matically cause an increase inthetax.

Even though municipal-

ities recognise the difficultsituation of taxpayers, theywill have no other choice butto increase the tax burdenabove the financial possibilit-iesoftaxpayers,Kaliksaid.

BY JANALIPTKOVSpectator staff

Taxrateson landvaryconsiderablyacrossSlovakia.Photo:Sme

7

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September26 October 2, 2011

Finance Ministryseeks to modify

the law on local

taxation

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BASE: Slovakia wants fiscal sovereigntyContinuedfrompg6

Harmonisation of taxrates is neither in the interestof Slovak companies norSlovakias state coffers,urana told The Slovak Spec-

tator. Representatives of theNBS are not elected in demo-cratic elections and their jobis to fulfil the tasks of theEuropean Central Bank,or thecabinet and parliament.Questions of fiscal sover-eignty or European integra-tion are beyond the missionof theNBS.

He thinks that while theCCCTB might mean simpli-fication for companies oper-ating in several EU coun-tries, it is questionablewhether they would opt forthe scheme, as it would co-exist with the current legis-lationin 27countries.He alsoquestioned how the taxes

paid would be dividedbetween member states, andsuggested the effect mightbe to decrease Slovakias

state revenues.The disadvantage of this

proposal is that it is designedin such a way that it does notprovide any significant ad-vantages to the business

sector, urana told TheSlovak Spectator, adding thatthe threat of harmonisationof tax rates still hovers in theair, as is proved particularlyby the efforts of France to

force Ireland to increase itscorporatetax rate.

According to urana, tax-rate harmonisation, with re-spect to rates in Germanyand France, would mean anincrease in rates for Slovakia.

Moreover, a fundamentalpolitical power would betransferred from Slovakia tocentral authorities in Brus-sels. Here urana pointedout that the history of the EUis full of examples of so-called salami slicing withtheaim of reaching the desiredstate of affairs, citing the ex-ample of repeated referen-dumsin Ireland.

The proposal for a com-mon consolidated corporatetax base represents a steptowards harmonisation,said urana. Because thisproposal does not bring anyobvious advantages, there isno reason to supportit.

Tax experts see more dis-advantages than advantagesto the proposal. ZuzanaBlaejov, manager of taxadvisory at KPMG in Slovakiaalso agrees with the FinanceMinistry, perceiving the ECsproposal as dangerous forsmall economies.

The tax system can be acertain motivational factorfor development of the eco-nomy of a country, as wasproved by the tax reform [inSlovakia] from 2003 and2004, Blaejov told The

Slovak Spectator. It is alsoobvious that rules for theCCCTB would be set by thestrongest economies withinthe EU. It is possible to ex-pect that they would betailored to suit the domin-ant economies and wouldnot be suitable for smalleconomies. The proposal ofthe d irec ti ve i s thu s a

concept that suits countrieslike France, the Netherlandsand Germany, but not coun-trieslike Slovakia.

According to Peter Paek,the head of the tax depart-ment at advisory company

Accace, implementation ofthe Directive on CCCTB

would result in what hecalled a partial loss of fiscalneutrality for Slovakia.

Paek explained that thestate uses taxes and way in

which they are calculated asa tool of its fiscal policy, to

respond to the developmentand changes in economiccycles and their negativeimpacts. By harmonisingtaxes across the EU the state

would thus lose an import-anttool.

He also identified anoth-er disadvantage in the factthat each EU member coun-try has implemented a dif-ferent taxpolicy.

While for some statesindirect taxes are the mainsource of income to the state

budget, other countries focusmore on direct taxes, Paeksaid. Such harmonisationcannot embraceall aspects ofmember countries. Eachcountry is different and has adifferentpreference.

With respect to taxharmonisation, accordingto Paek, it would cause aloss of tax competitiveness between individual coun-

tries. Slov akia , with itspresent tax system, is per-ceived as competitive withrespect to other EU membercountries, said Paek,adding that competitiontends to lead to the reduc-tion of tax rates or reduc-tion of the tax burden, andthat tax harmonisationmight instead result in anincrease in taxes.

But Paek also sees somepotential gains that taxharmonisation might bring,pointing out that tax com-petition currently meansthat individual countriessometimes fight to attract

mobile capital to theircountries. Currently thereis a tendency to reduce taxrates especially for corpor-ate entities, and for coun-tries to patch up the result-ing gaps in their state budgets through highertaxation of private indi-viduals, i.e. labour.

The advantage of har-monisation is that that there

would be no reason to movea company with a higher tax

burden into countries with alower one, said Paek,adding that this might sta-

bilise the level of tax burdenon private individuals andeven hold out the prospect of

a reduction.

MPIvan tefanec Photo:SITA

8 BUSINESS FOCUSSeptember26 October 2, 2011

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More tax hikes to patch budget hole

THESLOVAKgovernmenthasintroduced somenew

taxesand raisedtherates ofothers inordertopatchaholeforecast fornext years

budget.Apart froma speciallevy onbanksandan earlierhike inexcisetax oncigar-ettesit hasalso introducednew,moreefficient toolsagainst tax evasion, theSITAnewswirewrote,addingthatmeasuresto stopexcisetaxevasion areexpected to bringan additional30 milliontostatecoffers nextyear.

On September 21 thecab-inet also adopted a draftbillon excisetaxeson alcoholic

beverages. Eventhoughitdoesnot increaseexcise tax

rateson beer andspiritsorintroducean excise tax onstillwine,as thecoalitionhasfailedto reach agree-menton thesesensitive is-sues,the issueof imposinganexcise taxon still wine isstillnot closed forFinanceMinisterIvan Miklo.

Ill keepconvincingourpartnersthatit wouldbe agoodsolution, Miklo said,adding thatministries want1.5billionmorethanhe hasproposedin his draft budgetandthiscouldbe a wayto

bridge the gap.

Talking to the taxmanonline

THE TAX administrationhas registered an increasein thenumberof electron-ically-submitted docu-ments this year. Accordingto theTax DirectorateoftheSlovakRepublic, thispositivedevelopment is theresultof improved access-ibilityto itsinternetportalaswellas a new applica-tion, eTax,whichhas beeninstalled by morethan97,000userssinceMarchthisyear,the SITA news-

wire wrote in May.Thenumberof elec-

tronically-submitteddoc-umentsrose, inpartdue tothebetter accessibility oftheportaland thenewap-plication,from 39,012 in2010 to166,321in thecom-parable period of thisyear,saidTax DirectoratespokespersonGabrielaDianov, as quoted by SITA.

Accordingto Dianov, byusingthe eTaxapplication,thetax directoratesimplifiednotonly its electronic butalsoits writtencommunica-tion.The overallnumberoftax returnscompletedviaeTax,then printedand sent

bymail reached 242,000.Nevertheless,the eTax

application representsonlyoneof thefirststepsin creat-ingan electronic communic-ationsystembetweenthetax administrationand cit-izens and entrepreneurs.

Securing comprehensivedigitalisationof taxadminis-trationand creatinga unifiedsystemof taxes, customsdu-tiesand payrollleviescollec-tion isoneof themain goalsofthegovernmentsUNITASproject forthe 2011-2013period.


frompressreports

Taxdocumentsarenow availableonline. Photo:Sme

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FOCUSshorts


9/16

Parliament approves legislation tounify revenue collection via UNITAS

UNITAS, the long-awaited system thatwill bring the collection of taxes, cus-toms duties and mandatory payrolllevies under one state administrativebody has made a recent leap forward.Slovakias parliament adopted a trio oflawsin midSeptember,prepared bytheFinance Ministry, that authorise ne-cessary steps in the implementation ofUNITAS. Theoverall ideais tomake thisaspect of public administration less

bureaucratic and more efficient.UNITAS was unveiled during the gov-ernment of Robert Fico andPrime Min-ister Iveta Radiovs government con-tinues to move its implementationforward.

The aim of this reform is to changetax and customs administration so thatit is more effective in terms of reducingits own costs, more effective from theviewpoint of collecting state revenues,and simultaneously is pro-client ori-ented in processes that remove excess

bureaucracy, the Finance Ministrywrotein itsproposed changes tothe lawon tax administration, one of the three

tax-related pieces of legislation adoptedbyparliamenton September14.

The two other pieces of legislationdeal with the state bodies responsible

for collection of taxes, fees and customsand the law governing state financialadministration.

The Fico government adopted theoriginalUNITASconcept inMay 2008.

One of the Finance Ministrys prior-ities iscontinuing reformof taxadminis-tration along with involvement of cus-toms administration with the vision ofunifying processes for collection oftaxes, customs duties and payroll leviesinto one institution, the Finance Min-istry wrote in itsMarch2010 conceptpa-per describing what it plans to accom-plish. The Finance Ministry is respons-ible for coordinating the various aspectsof UNITAS.

Twophases

UNITAS has two phases. During theinitial phase, UNITAS I, tax and customsadministrationwill bereformed.The goalofUNITAS II is to then unifycollectionoftaxes and customs duties with collectionof payments made by companies and in-dividuals for health insurance and man-datory levies goingto Slovakiassocialin-surancecompany,Socilna Poisova.

Two of the laws adopted on Septem-ber 14 are related to the first phase. Thechanges in the law on state administrat-ive bodies authorises the combining theinstitutions collecting taxes, fees andcustoms duties at the directorate level bycreating a newly-designated Financial

Directorate.Separatetax and customs of-fices will be retained for some time toprevent an abrupt change in current pro-cesses that could negatively impact the

functionality of financial administrationor reduce access by citizens and compan-ies. Unification of tax and customs of-fices willbe undertaken in 2013.

TheSeptember 14 revisionto thelawon the tax code is also linked withUNITAS phase I and it amends regula-tions pertaining to specific kinds oftaxes and organisational structure. Itauthorises thefinance ministerto estab-lish the internal organisational struc-ture of tax offices as of the start of 2012,including branches tax offices and theircontactpoints.

The third piece of legislation deals with financial administration and un-der it the second phase of reform withthe goal of unifying collection of taxes,customs and insurance payments willbe pursued.

By merging the existing tax andcustoms offices, new financial officeswill be created that will carry out com-prehensive administration of taxes andcustoms, the Finance Ministry statedin itsmaterialsaccompanying the legis-lation. This will wrap up institutionalpreparationfor jointcollection of insur-ancepayments as of January2013.

The merger of the tax and customsadministrations is planned for January1,2013.Priorto this, thetax administra-tion must implement reforms by early2012 so that the other government of-fices will have time to prepare for thesubsequentmerger.

9BUSINESS FOCUS September26 October 2, 2011

Fewer audits, more WHILE the total number oftax audits performed in Slov-akia has been declining overrecent years, a higher numberof so-called findings indicatethat better methods and in-struments are being used by

the countrys tax administra-tion to root out tax fraud ortax errors. In 2006 there weremorethan30,000 taxauditsinSlovakia and the averageamount of each finding waslessthan 10,000 in miscalcu-lated or unpaid taxes. In 2010theTax Directorateperformedonly 18,400 tax audits but theaverage finding was 30,000,according to the Slovak

branchof Ernst & Young (E&Y)which wrote a report earlierthis year titled Tax Audits inthe Slovak Republic, based ondata released by SlovakiasTax Directorate.

Tax audits uncoveredfindings that totalled 556.3

million last year. Findings in VAT audits represented 76percent of the total findingsand accounted for 424.4 mil-lion in additional tax collec-ted,the SITAnewswirewrote.

According to Ernst andYoung, 54 percent of the taxaudits ended with a findingthat assessed additional taxliability and a penalty for thetaxpayer or in a decrease in atax loss involving corporateincometax.

E&Y ascribes the growthin the amount collected from

290 million in 2006 to 556million in2010in partto morefrequent exchange of interna-tional information bySlovakias tax authorities.Through international in-formationsharing, Slovakiais

able to gather better informa-tion for proper assessmentand payment of taxes by for-eign companies, even thoseoperating from so-called taxhavens. International in-formation requests increasedmost significantly in the areaof indirect taxes such as VAT,

which were tenfold higherthanrequestsregardingdirecttaxes such as personal or cor-porateincome tax.

Taxpayer compliance with VAT and corporate in-come tax requirements are ofprimary interest to tax audit-ors and preventing evasion of

VAT payments is perceived asmost important from the per-

spective of the public budgetand that is why audits mainlyfocusonthis area, E&Ywrote.

E&Y added that tax audit-ors have their highest successrate when auditing personaland corporate income taxpayments and the firm re-commends that taxpayers befully prepared to providesound arguments and havesufficient underlying docu-mentation to substantiatetheir tax calculations.


Goal is one state body

to collect taxes,

customs dutiesandpayroll levies

BYJANALIPTKOVSpectatorstaff

SP90541/6

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City of culture undergoes changes

2013, the year when Koice is to become aEuropean City of Culture (ECOC), is soon ap-proaching, and residents of the city claim thatin the past two years, since the city was sodesignated by the EU, significant changeshave occurred that are making Koice a cul-tural centre for the whole country. But thewinds of change have also been swirling with-in Koice 2013, the non-governmental organ-isation that is responsible for managing thecitys ECOC efforts.

In May, Zora Jaurov was removed as thedirector of the project and replaced by JnSudzina. This happened after Koice 2013 sug-gested that the powers of the managing dir-ector be divided between two persons: aproject manager and an art director. Jaurovwas originally chosen to be the art directorbut failed to get that position after a dis-agreement surfaced between the manage-

ment and the administrative board of Koice2013 over how to select the person for the pos-ition. The NGOs management group wantedthe art director to be appointed but the boardagreed on a new organisational structure thatrequired managers of the project to be selec-ted through public channels.

After that change, Jakub Urik, who hadserved as the lead manager for internationalrelations, was designated as the head of thedevelopment projects section. Peter Sokol,with previous experience in marketing andcampaign management for the Koicewomens basketball team, became head of themarketing and fundraising section and Mar-tin Petro became the head of the section for

finance, administration and public resources,after previously serving as the head of theeconomic department at the Childrens Fac-ulty Hospital in Koice, th

Documents

Slovak Spectator 1733