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Austrian Company Tax Cut Pays Dividends

by Ulrika Lomas, Tax-News.com, Brussels

03 December 2012


Although the government reduced the corporate tax rate in 2005 from 34% to 25%, revenue derived from the tax rose significantly from 2005 to 2008, from EUR5bn (USD6.5bn) to EUR6.3bn, according to Finance Minister Maria Fekter.

During a recent gathering of financial experts from Austria, Germany and Switzerland, Fekter said that the favorable corporate tax rate and the benefits of cross-border group taxation are real location advantages for Austria and continue to attract numerous companies.

The Austrian finance minister said that more than 300 companies are currently headquartered in Austria, highlighting the relatively low rate of corporate taxation, which is below the European Union average, and to the simple group tax provisions.

However, during the course of the meeting, Raiffeisen Bank consultant Ludwig Scharinger called for Austria’s tax laws to be further simplified, and for the number of tax exemptions to be reduced, pointing out that simplification will reduce the high costs for both the tax administration and for taxpayers.

Tax advisor Markus Achatz agreed, criticizing the fact that there are over 560 tax breaks, resulting in a lack of transparency. Tax administration must also be simpler and more attractive for middle-sized corporations Achatz stressed, referring in particular to the importance of lowering wage taxes.

There was a consensus at the meeting, however, that Austria remains an attractive location for investors. The Austrian finance ministry emphasized that this is a competitive advantage that should not be jeopardized.

Nevertheless, Fekter underlined the need to reduce the country’s personal income tax, saying that both the top rate of income tax and the entry rate of income tax must be lowered. At present, personal income in Austria is taxed at progressive rates up to 50%.

TAGS: tax | business | law | corporation tax | group taxation | corporate headquarters | Austria | tax breaks | individual income tax

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