The Tax System in the UK and Slovakia

Tax is a compulsory payment backed by law paid regularly and repeatedly by

natural and legal persons in fixed amount at fixed time. The main reasons for
having taxes are raising money for the government, raising the prices and
consequently reducing the consumption of harmful goods, encouraging
consumers to buy domestic G&S, etc. A legal system for assessing and
collecting taxes is called tax system. It can be progressive, regressive or
proportional. We differentiate between direct and indirect taxes. Direct taxes
are taken directly from people´s income. However, the indirect taxes are only
paid when people buy G&S. Direct taxes charged in the UK include: Income
tax, Inheritance tax, Corporation tax, Petroleum Revenue Tax, Capital
Gains Tax. Types of indirect taxes in the UK are VAT, Customs duties and
Excise duties (on Alcohol, Gambling, Fuels, Tobacco, Landfill tax, Insurance
Premium tax, etc.). The Slovak tax system has both similarities and differences
to the UK system. Direct taxes include Income tax and Local taxes. Income tax
is further divided into income tax of natural persons and of legal entities. An
individual in Slovakia is liable for tax on his income as an employee or as a self-
employed person. While residents of Slovakia are taxed on their worldwide
income, non-residents are taxed only on income received from Slovak resources.
As for the income tax of legal entities, Slovak resident companies pay tax on
income derived from worldwide sources. Non-residents are subject to corporate
tax only on income sourced in Slovakia. The company tax rate is 21% for both
resident and non-resident companies. Another tax paid by companies is Motor
vehicle tax, a tax levied on motor vehicles registered in Slovakia and used for
business purposes. Another category of taxes comprises of Local taxes, which
differ in villages and towns due to the fact that even though the conditions are
stated by law, they can be modified. Local taxes comprise of real estate tax, dog
tax, accommodation tax, etc. As far as the indirect taxes, these are divided into
VAT and Excise duties. VAT is imposed on supply of goods, provision of
services and on imports. The standard rate of VAT is 20%, but in some cases the
reduced rate of 10 % is placed. VAT is paid monthly. Excise duties are taxes due
for producers and importers of certain goods (alcoholic beverages, tobacco
products, mineral oils, electricity, coal, natural gas), usually monthly.

Kľúčové slová: Tax. UK. Slovakia.