Tax systems in the Czech Republic and the Slovak Republic: comparison with an emphasis on income tax

Economic Annals-ХХI: Volume 165, Issue 5-6, Pages: 47-51

Citation information:
Lipkova, L., Gress, M., & Poncarova, A. (2017). Tax systems in the Czech Republic and the Slovak Republic: comparison with an emphasis on income tax. Economic Annals-XXI, 165(5-6), 47-51. doi: https://doi.org/10.21003/ea.V165-10

Ludmila Lipkova
D.Sc. (Economics),
Professor,
Dean, Faculty of International Relations,
University of Economics in Bratislava
1/b Dolnozemská cesta Str.,
Bratislava 5, 852 35, Slovak Republic
ludmila.lipkova@euba.sk

Martin Gress
PhD (Economics),
Associate Professor,
Faculty of International Relations,
University of Economics in Bratislava
1/b Dolnozemská cesta Str.,
Bratislava 5, 852 35, Slovak Republic
martin.gress@euba.sk
ORCID ID: http://orcid.org/0000-0003-1655-043X

Alena Poncarova
PhD Student (Economics),
Faculty of International Relations,
University of Economics in Bratislava
1/b Dolnozemská cesta Str.,
Bratislava 5, 852 35, Slovak Republic
alapon@centrum.cz

Tax systems in the Czech Republic and the Slovak Republic: comparison with an emphasis on income tax

Abstract. The purpose of this article is to compare the methods of income taxation in the two neighbouring states – the Czech Republic and the Slovak Republic after more than a quarter century since the disintegration of their previous unified state. The article also focuses on the question of which of the two tax systems is more socially just and whether there is a realistic assumption that there will be reintegration of the principles of income taxation of both states within the European Union in the future. Several research methods were applied, dominated by the method of analysis and the comparative method. The selection of income taxes was not arbitrary. The method and rate of taxation plays a vital role in the social status of citizens of a particular state. Income taxes, on which both global and European coordination and harmonization processes have had very little impact, have become more important. Due to this fact, and also because of the free movement of labour, the applied way of income taxation within various territories may become an essential factor in tax competition between countries. Based on the analysis and comparison of individual tax practices related to the taxation of income, it can be stated that the income taxation between the two states does not differ fundamentally even after a quarter century of their independence.

We assume that the Slovak Republic is committed to looking for ways to develop more efficient methods of taxation of income even at the cost of some of the measures which have not been justified in practice yet. The Czech Republic is more conservative in this direction. It does not make radical changes and plays a waiting game to carry out the relevant measures later. Based on our analysis of the income tax systems both in the Czech Republic and the Slovak Republic, we conclude that the income tax system in the Slovak Republic is more effective, less costly and more socially just than the income tax system of the Czech Republic.

Keywords: Business Tax; Comparison of Tax Systems; Personal Income Tax; Tax Harmonization; Slovak Republic; Czech Republic

JEL Classification: H20; K34

DOI: https://doi.org/10.21003/ea.V165-10

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Received 3.04.2017