According to LN daily, recently proposed faster decrease in corporate income tax from 24% directly to 19% in comparison to gradual decrease to 19% over next 3 years should be compensated by different structure in VAT. New proposal for VAT counts with further decrease of base rate to 18% in comparison to current proposal of 19%, while the lower rate should be increased to 11%, 12% or 13% in comparison to current proposal of 9%.
The prime minister recently expressed himself that the direct decrease of corporate income tax from 24% to 19% doesn’t seem very probable should this change is not fiscal neutral. As a reaction the proposal for different VAT structure has been introduced, however several MP said previously that even initial plans to increase VAT to 9% has been on the very edge of their tolerance. As this is only one of several proposals for discussions and final version is not definite, we see it neutral for the moment. Second reading of fiscal reforms in the Parliament is expected only in the mid-August in order to allow the proposals to be fully implemented. This should then be followed by third and final reading.