In the beginning of 1994, tax holidays for payment of corporate income taxes were eliminated. A more liberal depreciation schedule was implemented extending the carry forward period for losses from one to five years. The basic rate for corporate income taxes was lowered in late 1994 from 40% to 25%. Capital gains are included in taxable income and taxed at the same corporate rate. The withholding tax on dividends distributed to residents is 25%, and 15% on dividends distributed to non-residents (unless the latter is reduced or eliminated through a tax treaty). The resident branches of foreign companies are taxed at the same 25% rate as Slovenian companies.
Personal income is taxed according to a progressive schedule ranging from 17%, up to taxable yearly income of 860,487 Tolar (about $4,277) to 50%, on the increment of yearly income above 5,162,920 Tolar (about $25,661). The intermediate bands in 2002 were 35%, 37%, 40% and 45%. All taxpayers can subtract 11% of their annual income from their taxable base. In addition, families with children can deduct 10% of their income for the first child and 5% for each additional child. There is a standard 3% deduction for investment in real estate, plus allowances for other living expenses, medical expenses, etc. Payroll taxes are assessed for health insurance and employment. Gift and inheritance taxes range from 5% to 30%. Land taxes range from 0.1% to 1.5%.
A sales tax of 20% on consumer products and 10% on services was replaced as of 1 July 1999 with Slovenia's value-added tax (VAT) introduced at a standard rate of 19% and a reduced rate of 7.5%. As of 1 January 2002 the standard rate was increased to 20% and the reduced rate upped to 8.5%. The reduced rate applies to transport, domestic rent and certain royalties. There are also excise taxes on alcohol, tobacco, and fuel.