November 30, 2021

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We need the courage to make major reforms.  How to cancel VAT

We need the courage to make major reforms. How to cancel VAT

The government has been discussing the final form of tax reform for nearly two years. TREND spoke with Vladimir, president of the Slovak Association of Small and Medium-Sized Enterprises and Self-Employed Persons (SAMP) about how to set up the Slovak tax system.

Since the government took power, only taxes and levies have been discussed. What do you think.

We certainly support lower taxes and levies. Specifically, from 21 to 15 percent current. This should generally apply, regardless of the source of income. I have an idea that the tax code should be “clean” and tax only on income. Social elements, bonuses and support should be in the social policy, which can of course take into account the position and status of the taxable person. We also expect tax reform to simplify rules and reduce the administrative burden.

What do you want exactly?

We have proposed the introduction of commercial licensing licenses for a period of fifteen years. We diligently launched the new one-for-three system. Where the entrepreneur pays income tax and social and health contributions in one payment. The amount paid depends on the annual income. In the new system, the entrepreneur will no longer have to keep accounts. Not only will this save money, but it will also give you more time to do business and earn money.

We also consulted the proposed organization with the partner organization “Association of Small and Medium-Sized Enterprises and Self-Employed Persons”, with which we have been collaborating for a long time. There, there was much more support from the local government. The Czech Republic provided the licenses at the beginning of this year. Unfortunately, we are still debating at home, but we haven’t made any progress.

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The introduction of tax licenses is a small change rather than a major reform.

We are certainly interested in discussing more drastic fixes as well. For example, to enter sales tax instead of value-added tax (VAT). To return to it more precisely, because this system has already worked in Slovakia in the past and is currently valid in the USA.

For a better explanation. We will provide a five percent sales tax. The turnover of the company is 100 euros. You will automatically pay five euros to the state from this amount. Of course, this is an explanatory rate. In the case of discussion, the exact amount will be determined by expert analyzes of state institutions. They know better at what rate the country will avoid a massive deficit on the tax revenue side.

The main idea of ​​the proposal is to simplify the system. Currently, a value-added tax of twenty percent is paid on most goods. But according to the law, it is paid only by the final consumer. Therefore, the state returns the tax paid to companies in some cases. In the case of sales tax, a flat rate will be paid on income and ‘returns’ will be waived. This significantly eliminates the scope of tax fraud.

As far as the VAT itself is concerned, I am not in favor of different rates for goods or merchandise or even regional rates. This complicates the system, makes it confusing, and gives way to various frauds.

The European Union is pushing hard enough to unify tax systems. Would introducing a unique sales tax based on local conditions likely not have a good chance of success?

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