InvestSlovenia

TAXATION

Internationally comparable strengths of Slovenia’s taxation system:

Low taxation of corporate income

Competitive tax allowances

Tax system comparable with EU member states

The tax / GDP ratio close to EU average

In an international comparison, the Slovenian tax system is characterised by a low rate of statutory corporate tax and an even lower effective income tax rate at the corporate level.

Maximum statutory corporate income tax rates in 2000

Source: IBFD: European Tax Handbook (2000)

The marginal effective tax rate of capital income (prior to personal income taxation), 1990s

Source: Čok (1998); Griffith (1996) and Griffith (1997)

Although the tax structure deviates somewhat from the EU average, the tax system of Slovenia is now broadly compatible with the tax systems of other EU Member States with the ratio of total taxes to GDP lower than the EU average.

Ratio of total taxes to GDP, 1999

Source: OECD: Revenue Statistics 1965-2000 (2001); Ministry of Finance of the Republic of Slovenia: Bulletin of Government Finance, No.4 (2002)

The taxation on investment income compares favourably with countries that have a classical taxation system for investment income. As tax reform is an on-going process, further changes are envisaged in 2005 - notably, changes in the personal income tax, corporate income tax, and a reform of wealth taxes.

The reform of the personal income tax will decrease tax revenues from this source, as basic tax reliefs will in effect increase the amount of non-taxed income.

The pending changes in the tax system, particularly as concerns the personal income tax and corporate income tax are geared towards greater neutrality of the system. The reform of personal and corporate income taxes will also boost the competitiveness of the Slovenian economy.

Tax wage of production worker without dependants in 1998

Source: OECD: Taxing Wages (1999); National Tax Administration of the Republic of Slovenia (1999)