The principal taxes are corporate income tax, personal income tax, and value-added tax. Individuals are liable for tax on all sources of worldwide income. Corporate income tax is levied on joint stock companies, limited liability companies, and limited partnerships. In 2002, the corporate tax rate for resident companies was 25%. Agricultural businesses were taxed only 15%. Capital gains were taxed at 25%, and the normal tax on dividends was 15%, although taxes on capital income were often reduced or eliminated in bilateral double-taxation prevention treaties. Owners of real estate are subject to an annual capital tax.
Individual income was taxed according to a progressive schedule with five bands: 10% (up to 90,000 Koruna, or about $2,464 annual income); 20% on the next increment of income up to about $4,928; 28% on the next increment up to about $10,840; 35% on the next increment up to about $15,442; and 38% on the increment above this amount. Besides standard deductions based on marital status, etc., there are allowable deductions for disabilities, health expenses, and mortgage interest payments.
The principle indirect tax is Slovakia's value-added tax (VAT). As of January 2002, the standard rate was reduced from 23% to 20%. In 2003, the reduced rate, which applies to foodstuffs, fresh fruits and vegetables, pharmaceuticals, electricity, gas and other basic utilities, was raised from 10% to 14%. Exported goods and a number of exported services are exempt from VAT. The government plans to simply the tax system in 2004, with cuts in direct taxes and more reliance on indirect taxes.