Slovenia to raise corporate tax to 19 pct, cut income tax

Slovenia will raise the tax on corporate profits to 19 percent, starting in 2017, from 17 percent now, and at the same time cut personal income tax, Mateja Vranicar Erman, the state secretary at the Finance Ministry, said on Thursday.

The state budget is expected to get an additional 60 million euros ($67.83 million) from higher corporate tax, Erman said, while the reduction in personal income tax should come to 106 million euros. The difference will be covered by better tax collection and, if needed, cuts in budget spending.

The government on Thursday confirmed the planned tax changes with the parliament expected to endorse them in the coming months.

Vranicar said that lower taxes on personal income should improve Slovenia's competitiveness and thus lead to higher economic growth although the country will keep the 50 percent tax rate for those with the highest income.

"These changes are just a first step and not the final goal but everyone we talked to confirmed that the changes should improve the existing situation," Erman told a news conference after the government session.

The ministry will propose additional tax changes next year.

Erman is also the candidate for the new finance minister and is expected to be confirmed by parliament later in September. She will replace her predecessor Dusan Mramor who resigned in July, citing personal reasons.

The Chamber of Commerce and Industry and The Association of Employers of Slovenia had said that the increase of corporate tax would hurt the economy, adding the government should cut personal income tax without increasing corporate taxes to improve Slovenia's competitiveness.