Slovak President Vetoes New Flat Rate Of Income Tax

by Ulrika Lomas, Tax-News.com, Brussels

27 November 2003

The President of Slovakia, Rudolf Schuster, has blocked a key economic reform which would introduce a 19% flat rate of income tax, the President’s office revealed on Tuesday.

Prior to this development, the law was due to take effect on January 1 next year after parliament approved the measures last month. However, the assembly has the power to over-ride the President’s veto if 76 of the 150 legislators support the measure.

Commenting on the new tax law recently, Finance Minister Ivan Miklos said that the reform would create a "fair, simple, and investment-oriented tax environment in the Slovak Republic," adding that he expects an influx of foreign investors as well as a reduction in tax evasion as a result of the new legislation. However, the President has argued that the proposals will be detrimental to Slovakia’s low income workers and pensioners.

Nevertheless, the legislation has the support of the OECD (Organisation of Economic Cooperation and Development) whose General Secretary David Johnston announced earlier this month that: "This reform is very important, and OECD will monitor its development very closely".

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