In line with the Austrian ruling coalition's agreement from the beginning of this year, the Austrian government yesterday approved a CIT rate cut from 34% to 25% as of January 2005, subject to parliamentary approval. Expected. Source: CTK.
The rate decrease should be, however, partially offset by changes in the tax base and we are therefore unable to estimate the final impact on Erste Bank’s effective tax burden. Moreover, introduction of group taxation that will combine the Austrian and subsidiary’s tax bases makes an estimate even more difficult. For simplicity’s sake we currently assume that the consolidated effective rate will decrease by half of the nominal tax-rate cut. As Erste's effective tax rate reached 29.4% in 2003 (it is below 34% due to numerous tax exceptions), we project Erste’s effective rate to decrease to 25% in 2005.
Jan Hájek, Patria Finance