Business News

Govt Tweaks VAT Act to Help Construction Sector

Ljubljana, 23 June (STA) - The government adopted on Thursday changes to the VAT act, conceived as the first in a series of measures aimed at helping the ailing construction sector. The changes are expected to improve the liquidity of companies with open claims towards companies undergoing debt restructuring or receivership.

The proposal allows companies to reduce the value added tax amount stemming from claims registered towards companies in debt restructuring or receivership.

In cases of debt restructuring the tax will be reduced by 30% and in cases of receivership by 60%, Finance Minister Franc Krizanic told the press.

In line with the current act, VAT reductions are only possible after the completion of debt restructuring or receivership proceedings.

According to Krizanic, this will help the liquidity of subcontractors, while on the other hand putting an additional EUR 30m burden on the state budget.

Still, the government expects that the budget will eventually be positively affected indirectly from an upturn on the labour market.

Meanwhile, the government also plans to also adopt before the summer holidays new rules on public procurement, which should prevent price dumping, while it is also drawing up a guarantees scheme bill.

The amended VAT act will be enforced for claims approved in debt settlement or receivership proceedings that were launched after 1 January 2011. In case claims get repaid, the beneficiaries of the VAT reduction will have to make up for the difference subsequently.

The proposal also envisages a number of other solutions to administrative burdens related to VAT payments.

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