Transcript Enlargement and Internationalisation of National Systems

Business Environment in EU
after Enlargement
Rome, July 9, 2004
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Business Environment in EU
Priorities for Internationalisation
Slovak Tax Reform
EU Challenges
Summary
Rome, July 9, 2004
Business Environment in EU
Rome, July 9, 2004
Global Competitiveness by
World Economic Forum
Rank
1
2
3
4
5
6
7
8
9
10
Rome, July 9, 2004
Country
Finland
USA
Sweden
Denmark
Taiwan
Singapur
Switzerland
Island
Norway
Australia
GDP per capita
Non EU
40%
EU 25
EU 15
New EU Members
1.Luxembourg
33.Slovakia
60%
60%
0%
44.Latvia
Rome, July 9, 2004
GDP Growth in last 7 years
Non EU
EU 25
EU 15
New EU Members
2.Ireland
30%
60%
40%
13.Slovakia
10%
67.Belgium
Rome, July 9, 2004
FDI bringing New Technology
Non EU
EU 25
EU 15
New EU Members
1.Ireland
25%
70%
7.Slovakia
30%
5%
87.Slovenia
Rome, July 9, 2004
Quality of Math and Science Education
Ine staty
EU 25
EU 15
Novi clenovia EU
2.Belgium
25%
50%
50%
25%
11.Slovakia
76.Portugal
Rome, July 9, 2004
SWOT
Strengths
Weaknesses
Growth in new EU countries
CAP
The largest Single Market
Structure of EU budget
Purchase Power
State Budget Deficits
Stable Currency
Opportunities
Threats
Easy Market Access
Short Term Approach
Flexible Labor Market
Decision Making Process
Simple Tax and Administrative Rules
Rome, July 9, 2004
Priorities for Internationalisation
Rome, July 9, 2004
Priorities
1/ Easy Market Access
2/ Flexible Labor Market
3/ Simple Tax and Administrative Rules
Rome, July 9, 2004
1/ Easy Market Access
• Entry Cost to Market
– Denmark 0 fee
– In most EU countries high fee (1500-6000
EUR)
• Entry Time to Market
– Denmark 3 days, UK 5 days
– 2-3 months in some new EU countries
• Simplification of Administration for Start of
new business
Rome, July 9, 2004
2/ Flexible Labor Market
• Need for Improvement of Labor Mobility
• More flexible Labor Code
– Working Time
– Variable Job Contracts
– Temporary Workers Use
• Comparison with US
• 25 – 54
• <25
• >54
Rome, July 9, 2004
OK
far behind
far behind
3/ Simple Tax and
Administrative Rules
• Income tax level is lower than in US
(average 13.3% vs. 15.7%)
• Social cost is doubled than in US
(29.9% vs.14.2%)
• Social cost reform is necessary in most
European countries
• Simple and Stable Rules
• Flat Tax
Rome, July 9, 2004
Support for European
Enlargement
• European Integration will lead to the
Efficiency Improvement
• Economic Standardization
• Cultural Localization
• Regular communication between Business
and Politics is inevitable
Rome, July 9, 2004
Slovak Tax Reform
Rome, July 9, 2004
Slovak Top Points
• Referendum for EU entry – the highest
percentage voting YES (92.5%)
• European Parliament voting – The lowest
number of MEP’s against (21)
• The fastest growing economy in Central
Europe (4% CAGR 1997-2004)
• The largest country entering to EU and
NATO in 2004
• First EU country introducing one VAT rate
and one Flat Corporate and Personal
Income Tax (19%)
Rome, July 9, 2004
Barriers for Doing Business
• Very often changes of legislation
– Income Tax Law -31x, Administration of
Taxes and Fees -20x
– Too big contents – Income Tax Law 4x
bigger in 10 years
• Ad hoc reaction
– Unexpected fast changes of legislation
– Non-univocal explanation of law and
potential conflicts with Tax Offices
Rome, July 9, 2004
Tax Strategy
• Need for new complex Tax Strategy
– Taxes should secure funding of public service
– Taxes should have as neutral as possible
impact for doing business
Rome, July 9, 2004
Tax System
• Direct Tax
– Profit
• Flat Corporate and Personal Income Tax
– Equity
• Real Estate Tax
• Motor Vehicles Tax
• Indirect Tax
– General Consumption
• Value Added Tax
– Specific Consumption
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Consumer Alcohol Tax
Consumer Beer Tax
Consumer Wine Tax
Consumer Tobacco and Tobacco Products Tax
Consumer Mineral Oil Tax
Rome, July 9, 2004
Results of Slovak Tax Reform
• Cancelled Inheritance Tax and Tax on Sale
of Real Estate
• Flat Tax Introduction
• Savings of only one VAT rate
• Simplicity of Tax System
• Transparency for all Stakeholders
• Stimulation for higher Earnings
Rome, July 9, 2004
EU Challenges
Rome, July 9, 2004
EU Challenges
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Constitution Treaty
Structure of EU budget
Tax harmonization
Position of European Institutions after
breaching Growth and Stability Pact
• Liberalization
• SME Development
• GDP Growth
Rome, July 9, 2004
Summary
Rome, July 9, 2004
Summary
• EU is on 70% level of US (GDP per capita)
• New EU Members
– GDP per capita
– GDP Growth
– Direct Taxes Decline
• Reforms for Growth
– 1/ Easy Market Access
– 2/ Flexible Labor Market
– 3/ Simple Tax and Administrative Rules
Rome, July 9, 2004
Joint Objectives with Politicians
• European Union Active Membership
• Simplification of Legislation in order to
minimize subjective decisions
• Decrease of Social Cost in order to support
the economical growth and to decrease
unemployment
• Support of pro-investment environment for
local and foreign business including more
flexible labor market
• Activities focusing on Ethical Standards
improvement and corruption minimization
in society
Rome, July 9, 2004
Business will contribute by
the growth to the
improvement of quality of
lives in EU
Rome, July 9, 2004