What is the new tax reform all about?
The proposed measures aim to restructure tax burdens, improve efficiency in collecting public duties and cut red tape, in order to increase the competitiveness of the Slovenian business environment.
With this goal in mind and in order to facilitate the upskilling of posted workers, the proposed amendment to the Personal Income Tax Act (Zakon o dohodnini) reduces the tax burden of highly qualified workers posted either from Slovenia abroad or from abroad to Slovenia. The amendment distinguishes between workers posted for up to 30 days and over 30 days, whereas the more favourable treatment is foreseen only for those posted workers, who work abroad for at least 30 consecutive days and whose place of posting is so far from their home that a daily commute is no longer economically viable. In order to prevent social »dumping« (i.e. »importing low-cost labour«, which would amount to unfair competition to domestic workers), less qualified workers, who are posted to Slovenia, are excluded from this favourable tax treatment. Furthermore, rules on reimbursement of expenses in respect of employees temporarily posted abroad are also regulated more favourably.
Other amendments to the Personal Income Tax Act pursue, in particular, social goals. With the elimination of the progressiveness of the additional general tax relief, the Government hopes to avoid the lowest earners actually receiving a lower net income in cases where their gross wage is increased. A special personal tax relief for students is planned to increase from 75 % to 100 % of the amount of the general tax relief. Moreover, there are plans to exempt »free legal aid« from personal income tax.
A heated debate ensued when the Government presented the changes to the Personal Income Tax Act and the Corporate Income Tax Act (Zakon o davku od dohodkov pravnih oseb) regarding the taxation of standardized expenses from activities. The original plan was to reduce the level of standardized expenditure to 60% and to return to synthetic taxation. It turned out that these proposals were too ambitious as the taxation regime of standardized expenditure remains unchanged (the amount of standardized expenditure is maintained at 80% and the taxation is final and not included in the annual PIT calculation). As a backup plan the Government proposed several measures intended to prevent abuses when assessing the tax base for standardized expenses such as upgrading the rule on compulsory exit from the standardized expenditure tax base assessment system, the maximum absolute amount of recognized standardized expenditure, the aggregation of the revenues of related persons, etc.
Due to above changes amendments to the Tax Procedure Act (Zakon o davčnem postopku) were needed, introducing also the possibility for non-cash payments on Slovenian Public Payment Administration.
The last amendment refers to the Fiscal Validation of Receipts Act (Zakon o davčnem potrjevanju računov) which provides the legal basis for further use of linked book of accounts also from 31 December 2017 onwards.
All proposed changes still need to be confirmed by the National Assembly.
