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Business Environment in EU after Enlargement

Business Environment in EU after Enlargement. Business Environment in EU Priorities for Internationalisation Slovak Tax Reform EU Challenges Summary. Business Environment in EU. Global Competitiveness b y W orld E conomic F orum. GDP per capita. 1.Luxemb ourg 33.Slov akia 44.L atvia.

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Business Environment in EU after Enlargement

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  1. Business Environment in EU after Enlargement

  2. Business Environment in EU • Priorities for Internationalisation • Slovak Tax Reform • EU Challenges • Summary

  3. Business Environment in EU

  4. Global Competitiveness by World Economic Forum

  5. GDP per capita 1.Luxembourg 33.Slovakia 44.Latvia

  6. GDP Growth in last 7 years 2.Ireland 13.Slovakia 67.Belgium

  7. FDI bringing New Technology 1.Ireland 7.Slovakia 87.Slovenia

  8. Quality of Math and Science Education 2.Belgium 11.Slovakia 76.Portugal

  9. SWOT Strengths Growth in new EU countries The largest Single Market Purchase Power Stable Currency Weaknesses CAP Structure of EU budget State Budget Deficits Opportunities Easy Market Access Flexible Labor Market Simple Tax and Administrative Rules Threats Short Term Approach Decision Making Process

  10. Priorities for Internationalisation

  11. Priorities 1/ Easy Market Access 2/ Flexible Labor Market 3/ Simple Tax and Administrative Rules

  12. 1/ Easy Market Access • Entry Cost to Market • Denmark 0 fee • In most EU countries high fee (1500-6000 EUR) • Entry Time to Market • Denmark 3 days, UK 5 days • 2-3 months in some new EU countries • Simplification of Administration for Start of new business

  13. 2/ Flexible Labor Market • Need for Improvement of Labor Mobility • More flexible Labor Code • Working Time • Variable Job Contracts • Temporary Workers Use • Comparison with US • 25 – 54 OK • <25 far behind • >54 far behind

  14. 3/ Simple Tax and Administrative Rules • Income tax level is lower than in US (average 13.3% vs. 15.7%) • Social cost is doubled than in US (29.9% vs.14.2%) • Social cost reform is necessary in most European countries • Simple and Stable Rules • Flat Tax

  15. Support for European Enlargement • European Integration will lead to the Efficiency Improvement • Economic Standardization • Cultural Localization • Regular communication between Business and Politics is inevitable

  16. Slovak Tax Reform

  17. Slovak Top Points • Referendum for EU entry – the highest percentage voting YES (92.5%) • European Parliament voting – The lowest number of MEP’s against (21) • The fastest growing economy in Central Europe (4% CAGR 1997-2004) • The largest country entering to EU and NATO in 2004 • First EU country introducing one VAT rate and one Flat Corporate and Personal Income Tax (19%)

  18. Barriers for Doing Business • Very often changes of legislation • Income Tax Law -31x, Administration of Taxes and Fees -20x • Too big contents – Income Tax Law 4x bigger in 10 years • Ad hoc reaction • Unexpected fast changes of legislation • Non-univocal explanation of law and potential conflicts with Tax Offices

  19. Tax Strategy • Need for new complex Tax Strategy • Taxes should secure funding of public service • Taxes should have as neutral as possible impact for doing business

  20. Tax System • Direct Tax • Profit • Flat Corporate and Personal Income Tax • Equity • Real Estate Tax • Motor Vehicles Tax • Indirect Tax • General Consumption • Value Added Tax • Specific Consumption • Consumer Alcohol Tax • Consumer Beer Tax • Consumer Wine Tax • Consumer Tobacco and Tobacco Products Tax • Consumer Mineral Oil Tax

  21. Results of Slovak Tax Reform • Cancelled Inheritance Tax and Tax on Sale of Real Estate • Flat Tax Introduction • Savings of only one VAT rate • Simplicity of Tax System • Transparency for all Stakeholders • Stimulation for higher Earnings

  22. EU Challenges

  23. EU Challenges • Constitution Treaty • Structure of EU budget • Tax harmonization • Position of European Institutions after breaching Growth and Stability Pact • Liberalization • SME Development • GDP Growth

  24. Summary

  25. Summary • EU is on 70% level of US (GDP per capita) • New EU Members • GDP per capita • GDP Growth • Direct Taxes Decline • Reforms for Growth • 1/ Easy Market Access • 2/ Flexible Labor Market • 3/ Simple Tax and Administrative Rules

  26. Joint Objectives with Politicians • European Union Active Membership • Simplification of Legislation in order to minimize subjective decisions • Decrease of Social Cost in order to support the economical growth and to decrease unemployment • Support of pro-investment environment for local and foreign business including more flexible labor market • Activities focusing on Ethical Standards improvement and corruption minimization in society

  27. Business will contribute by the growth to the improvement of quality of lives in EU

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