Slovakia Gives Green Light To Bank Tax

by Ulrika Lomas, Tax-News.com, Brussels

24 October 2011

Slovakia’s parliament has recently adopted a law providing for the introduction of a bank tax in Slovakia in 2012.

Expected to yield in the region of EUR80m (USD111m) annually, according to the Slovak finance ministry, the tax is to be levied at a rate of 0.4% on the value of outstanding loans after the deduction of capital and retail deposits, and is designed to reduce the public deficit to 3.8% of gross domestic product (GDP) next year.

A spokesman from the finance ministry explained that proceeds from the tax would also flow directly into a special fund to cover the costs of any future financial crises, while underscoring that the country’s banking sector is not currently at direct risk from the sovereign debt crisis in Europe.

Financial institutions in Slovakia have opposed the government’s bank tax plans from the outset, arguing that the levy will be the highest in the eurozone, and warning that the tax could serve to jeopardize the capital adequacy of banks and merely lead to an increase in banking fees for customers.

Slovakia’s Finance Minister Ivan Miklos confirmed government plans to press ahead with the introduction of a bank tax in Slovakia back in April.

Alluding to the fact that several countries have now already introduced a bank levy in some form of another, Miklos explained at the time that although the government would prefer to follow a coordinated approach led by the EU, if at all possible, it is currently taking too long to reach a consensus. Indeed, it seems unlikely that an agreement will be reached before 2013, perhaps 2014 at the earliest, the minister added.

The law still requires presidential approval before it can enter into force.

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