Tax incentives in the countries of the visegrad four

Tax incentives are a tool of regional policy. When providing investment incentives, conditions for their provision must be clearly defined. It is necessary to coordinate investment incentives at the state level with redistribution of EU funds. The criteria for the provision of investment incentives must correspond with the main objectives of regional policy. The aim of this contribution is to analyze the tax incentives in tax system in the countries of the Visegrad Four (V4). The introductory part is the theoretical definition of tax and tax incentives. The analytical part is devoted to the analysis of tax incentives in the form of investment incentives provided in the Slovak Republic in the period 2002–2016. The results of the contribution constructed on the basis of the comparison detail the conditions for the granting of tax incentives for research and development in the V4 countries depending on the individual requirements and conditions of the countries themselves, systems, valid legislation, etc., which differentiate each other and at the same time compete in a certain way, compete with the funds of foreign investors. Jana Simonidesová (Slovak Republic), Slavomíra Stašková (Slovak Republic), Adela Feranecová (Slovak Republic), Eva Manová (Slovak Republic), Peter Remiáš (Slovak Republic) BUSINESS PERSPECTIVES LLC “СPС “Business Perspectives” Hryhorii Skovoroda lane, 10, Sumy, 40022, Ukraine www.businessperspectives.org Tax incentives in the countries of the visegrad four Received on: 2nd of November, 2017 Accepted on: 5th of December, 2017 INTRODUCTION Taxes are a very important source of state revenue for the state budget, therefore each state should be particularly cautious when compiling its tax legislation. It is the right of every state to be able to determine its own conditions for the collection of taxes from taxpayers, and now it is also necessary not to forget about the environmental aspect of taxes and the possibilities of foreign investments. According to Čuchrová et al. (2016), “Closet environment includes specifically business environment such as customers’ needs, behavior of competitors and suppliers, development of macroeconomic conditions (monetary and fiscal policies, legislation, tax system, possibilities of foreign investments, environmental requirements, etc.)” (pp. 180-191). One of the possibilities to make the country more attractive and to attract more investors is granting of tax incentives in various forms of tax relief, levies, exemptions, etc. Tax incentives or tax reliefs are currently the part of the Slovak Republic’s regional aid and are aimed at supporting the investment. They are subject to Act No. 565/2001 Coll. on investment aid. It determines the main criteria that must be met by the applicant for investment incentives and defines the mechanism for their approval and provision. This Act is in accordance with the Constitution of the Slovak Republic, in particular with Act No. 231/1999 Coll. on state aid, with Act No. 595/2003 Coll. on income taxes and Act No. 387/1996 Coll. on employment (Ballabášová, 2015, p. 82). © Jana Simonidesová, Slavomíra Stašková, Adela Feranecová, Eva Manová, Peter Remiáš, 2018 Jana Simonidesová, Ph.D., Faculty of Business Economics with seat in Košice, Department of Financial Management, University of Economics in Bratislava, Slovak Republic. Slavomíra Stašková, Ph.D., Faculty of Business Economics with seat in Košice, Department of Financial Management, University of Economics in Bratislava, Slovak Republic. Adela Feranecová, Ph.D., Faculty of Business Economics with seat in Košice, Department of Financial Management, University of Economics in Bratislava, Slovak Republic. Eva Manová, Ph.D., Faculty of Business Economics with seat in Košice, Department of Financial Management, University of Economics in Bratislava, Slovak Republic. Peter Remiáš, Faculty of Business Economics with seat in Košice, Department of Quantitative Methods, University of Economics in Bratislava, Slovak Republic. This is an Open Access article, distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International license, which permits re-use, distribution, and reproduction, provided the materials aren’t used for commercial purposes and the original work is properly cited. tax, tax incentives, tax policy, Visegrad Group


INTRODUCTION
Taxes are a very important source of state revenue for the state budget, therefore each state should be particularly cautious when compiling its tax legislation. It is the right of every state to be able to determine its own conditions for the collection of taxes from taxpayers, and now it is also necessary not to forget about the environmental aspect of taxes and the possibilities of foreign investments. According to Čuchrová et al. (2016), "Closet environment includes specifically business environment such as customers' needs, behavior of competitors and suppliers, development of macroeconomic conditions (monetary and fiscal policies, legislation, tax system, possibilities of foreign investments, environmental requirements, etc.)" (pp. 180-191).
One of the possibilities to make the country more attractive and to attract more investors is granting of tax incentives in various forms of tax relief, levies, exemptions, etc. Tax incentives or tax reliefs are currently the part of the Slovak Republic's regional aid and are aimed at supporting the investment. They are subject to Act No. 565/2001 Coll. on investment aid. It determines the main criteria that must be met by the applicant for investment incentives and defines the mechanism for their approval and provision. This Act is in accordance with the Constitution of the Slovak Republic, in particular with Act No. 231/1999 Coll. on state aid, with Act No. 595/2003 Coll. on income taxes and Act No. 387/1996 Coll. on employment (Ballabášová, 2015, p. 82).

TAX INCENTIVES
Tax incentives are also called tax reliefs, tax credits, tax benefits, perhaps even temporary tax breaks. As we have mentioned above, taxes fulfill several state functions. One of them is a stimulating function. Taxpayers perceive this duty as harm, and are therefore willing to do anything to restrict it. Therefore, the state provides various forms of tax savings, direct subsidy, reliefs, of which enterprise reduces the tax liability, e.g. allowing entrepreneurs to reduce the tax base on income of business loss, provision of tax breaks (i.e. reducing the tax to a person who fulfils certain conditions). There are also negative tax incentives, e.g. high taxation of alcoholic beverages, cigarettes, by which the state seeks to regulate consumption and protect the health of consumers (Vančurová, Láchová, 2014, p. 391).
Tax incentives or tax reliefs are part of regional aid in Slovakia with a focus on investment support. They are subject to Act No. 565/2001 Coll. on investment aid and amending and supplementing of certain acts. Aid under Act on investment aid is provided in the form of tax incentives by the Act on investment aid (Figure 1 1. with a co-owner in respect of a certain matter -income and expenditure based on co-ownership are divided by the coownership shares, thereby their tax progressivity is reduced; 2. with a participant in the association -income and expenditure generated in this joint venture will be distributed among the participants according to pre-specified ratio, thereby also their tax progressivity is reduced; 3. with assisting persons -income and expenditure may be distributed to a person living with a businessman in one household, with the intention of reducing tax progressivity.

e. Application of tax depreciation
f. Possibility to deduct the tax loss -it is also possible to deduct the tax loss, which occurred in the previous tax periods, in which the taxpayer showed the tax base and tax for the first time since its establishment. Tax loss may be deducted equally for no more than 4 consecutive tax periods, but only from the tax base on corporate income, or from other self-employed activity. Tax loss can't be deducted, for example, from the rental income or capital assets.
g. Income exempt from taxation -includes income exempt from taxation in the context of supporting environmental projects, sale of non-business property, some lottery winnings, allowances and benefits of health and social security, etc.
h. Tax bonuses -it is amount which reduces tax by achieving certain conditions according to tax law, for a child in year 2017, it is 21,41 Euro per month.
i. Tax incentives for research and developmentsince January 1, 2015, the amendment to the Act on income tax introduced a new type of tax benefit, so called "super-deduction", for taxpayers performing research and development. It consists in deducting expenditure (costs) for research and development from the tax base. Results of research and development are expenditure (costs) that are part of the economic result and are eligible for a re-deduction from the tax base reduced by the tax loss in the amount of 25%. Concretely, 25% of the actual costs for research and development, 25% of labor costs, newly enrolled graduates of secondary and higher education institutions and 25% of the year-on-year increase in the cost for research and development.
The Ministry of Economy of the Slovak Republic presents the classification of fiscal investment incentives, which in practice are most often used and which are illustrated in Table 1 (Vidová, 2014, pp. 57-65).

Fiscal investment incentives
Based on profit Reduction of corporate income tax, tax breaks, the possibility to write off losses in the tax break period later, in the event of making a profit Based on capital investment Accelerated depreciation Based on labor force Reduced social security contributions, deductions from taxable income depend on the number of employees or other expenditure relating to employment Based on sale of products Reduction of corporate income tax based on the quantity of products sold Based on value added tax Reduction of value added tax, acquisition of a contribution dependent on the significance of production Based on specific expenditure Reduction of corporate income tax based for example on marketing or advertising expenditure Based on import The exemption from import duties on capital goods, equipment, mineral resources and other inputs related to the production process Based on export Related to output, e.g. exemption from export taxes, favorable tax treatment of export, reduction of corporate income tax on foreign activities, tax advantages on domestic sales in the case of export, related to inputs, e.g. a favorable tariff treatment, an advantage of import duties on material or suppliers

RESULTS
This part of the paper focuses on the conditions of tax incentives in the form of investment incentives granted in the Slovak Republic and in other V4 countries (Czech Republic, Hungary, Poland). In the end we focused on investment incentives in the field of research and development in selected countries. There are cases when the incentive is not completely exhausted and exceptionally the investment will not start. In recent years, the amount of incentives has reached 2% to 4% of corporate income tax.

Tax incentives in the Slovak Republic
Almost half of the incentives took the form of an income tax relief, more than a third were subsidy for fixed tangible and intangible assets. Subsidy for the created workplace was at 7% level. Successful investment generates a product, jobs and taxes or levies, but at the same time fewer investments will be made in other companies. Investment incentives favor only a few companies per year, mostly in more advanced regions. In terms of the provided incentives according to regions, it looks as follows.
The districts with above-average unemployment received only a quarter of the financial volume and one third of the planned jobs, compared with the districts with below-average unemployment. Trnava region and Žilina region received the largest volume of incentives thanks to the automotive industry. The last of the regions, the Prešov region, is lagging behind. INNES analysts generally propose to eliminate direct investment aid, eliminate bureaucracy, reduce tax burden and consolidate the budget on the expenditure side.
The Government of the Slovak Republic decided to provide state aid of Euro 33,33 million to five investors, mostly in the form of tax relief or subsidies for the purchase of tangible assets. The incentive will be given to two firms from the agrofood industry, two firms from the automotive industry and one company planning to produce payment cards and security documents. In case of meeting investors plans, jobs for 1,804 people would be created.  Some analysts criticize state aid, because it does not create anything, only redistributes. The frequent argument of advocates is that the compa-ny will collect and pay for its own incentive by paying the value added tax, excise duty, levies and employee taxes. However, analysts argue that direct subsidies, as well as forgiven taxes, are the expenditure that other companies have to collect in the budget and it doesn't help the undeveloped regions. They recommend to the government to focus more on improving the business environment than on supporting selected investors. Support of large foreign investors is at the behalf of all others and in particular, it negatively affects small entrepreneurs who pay higher taxes and levies. The state would most help investors by removing bureaucracy, corruption, simplifying tax rules and the labor market. Transfer of property at a price below the market price

Tax incentives in V4 countries
Each country has developed its own conditions for incentives. The legislation defining this aid for V4 countries is subject to EU general rules, as well as its own legislation. When providing investment incentives, the conditions for their provision must be clearly defined. The aim of support under the law is to ensure the development of regions and the reduction of regional disparities to stimulate investment in the most undeveloped regions and to create new jobs. Investment projects are supported in the fields of industrial production, centers of strategic/ shared services, technological innovation centers and in Slovakia also in tourism. Each country has developed its own conditions for incentives (see Table A in Appedix).

Tax incentives for research and development
Tax incentives through indirect support in research and development are different in the amount and under different conditions determined by the country. The tax burden in each country (indicators such as tax quota, compound tax quota, effective tax rates, implicit tax rates, etc.), competitive strengths and weaknesses of tax systems, double taxation, tax evasion, etc. are very important. Tax systems are the most important factor influencing the business environment. An effective tax system should not only provide sufficient income for the state budget, but also stimulate investments and en-trepreneurship, competitiveness and economic growth. The leading countries are Denmark, Sweden, Finland, so-called Nordic countries.
In advanced economies, tax reliefs for research and development are realized in the form of: • tax credit (tax relief); • deductions (items deductible) from the tax base; • deferment of taxes; • depreciation policy (accelerated depreciation); • various special incentives (aimed at creating new jobs, supporting the deployment and use of top technologies in SMEs, etc.); • tax support for risk capital; • reduction of levies of employer and development staff.
Other forms of indirect support of research and development include guarantee mechanisms, preferential credits for research and development, favored lease of state/regional infrastructure for these activities and others. Nowadays, in the EU and OECD countries, tax incentives prevail in the form of tax reductions. Tax

Conditions of aid
The conditions depend on the location, region in which the project is being implemented and the conditions of V4 countries. The conditions include the maximum investment amount, the minimum number of created jobs, the eligible costs, the minimum share of the new technical equipment, the maximum aid intensity APPENDIX A