How to Stop the Lagging Slovak Economy

In recent years, the Slovak Association of treasurers (SAF) has been organizing discussions to support the economic growth of Slovakia. The reason is Slovakia's lagging behind in key indicators such as convergence within EU countries, the DESI index and also the Innovation scoreboard.

Politicians tend to repeat that Slovakia has enough financial resources from European funds, new and old, as well as from the Recovery Plan, but despite this, we are still falling in all these indicators. In the discussions, we remind you that the support of science, research and especially innovation in companies is key to the acceleration of economic growth. We also directed the discussion last week to these topics.

The ambition of this discussion was not to solve all the problems that hinder the Slovak economy, or solve the problems that cause Slovakia to lag behind in Innovation performance. It is not our task to solve the reform of the management of science, research and innovation support, its organizational structure, which is the task of the state and is being prepared from the resources of the Recovery Plan.

In particular, we want to support the perception of the need for innovation in companies, to arouse interest in companies to invest in innovation by any means (loans, grants), but especially to direct own resources (profit) to investment in innovation, to return it to the economy. In this spirit, in previous years we prepared and submitted to the Ministry of Finance a Tax Manifesto with the following proposed measures:

• Radical tax support for innovations and investments - super deduction, super depreciation, patent box.
• Tax support for the recapitalization of companies - support for the reinvestment of capital income of natural persons, shifting the taxation of income from employee shares and options to the actual realization of income, Unification of the tax regime for capital contributions and contributions to capital funds.
• Realization of tax amortization of assets – tangible assets, receivables.
• A more efficient mode of calculation of profits and losses in time and space. Removal of tax obstacles to business reorganization – group taxation, transfer of tax loss to the past, improvement of the regime of transfer of tax loss to the future.

We also monitor how these tools are applied, we care that they are correctly applied in practice and that companies do not have problems during tax audits in the future. To this end, we held workshops and brainstorming sessions with the Ministry of Finance and the Financial Administration authority, where we tried to eliminate the different views between the perception of the law between businesses and legislators and controllers. For example, on the issue of the element of novelty. We see it as any innovation that increases labour productivity and the competitiveness of companies is good and necessary. We need investments in startups, to expand and support not only digitization, but also IT companies, and to prepare suitable legislation for this.

We also need to support science and research at universities and also increase interest in its financing on the part of companies. One of the topics presented was the study of how digitization (Industry 4.0) affects GDP growth, or on labour productivity. Further development of the study is the subject of cooperation between the University of Economics in Bratislava and business, including in matters of financing. As part of the cooperation with the University of Economics in Bratislava, SAF and colleagues prepared the optional subject "Financial management of a company - Case studies" for 5th year students. We kicked off it with colleagues just this week.

Andrej Revay, Honorary President, Slovak Association of Treasurers (SAF)