Lower tax makes Hungarian businesses move to Slovakia
Wednesday, July 13, 2005, 08:07
Low corporation tax and VAT has attracted around a thousand Hungarian companies to move their headquarters to areas near the Hungarian border in Slovakia, a Slovak daily reported. Mainly Hungarian trading and broker companies set up businesses in Slovakia and the local tax office has found them disciplined tax-payers. At the same time, a large number of Slovak employees travel across the border each day to work in Hungary, as a result of which unemployment in areas near the border in Slovakia dropped from 20% to 10% in one year, the paper said. According to figures of the Hungarian Chamber of Commerce quoted by the paper, Hungarian businesses attracted by lower taxes have "exported" capital equivalent to around USD 1.5 million to Slovakia. Companies must pay a flat 19% corporation tax and VAT is also 19% in Slovakia. In Hungary, new tax measures will be introduced from January 1, 2006, and will include reducing the top bracket for value-added tax (VAT) to 20% from the current 25%.