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There is an increasing focus under the current government on public infrastructure projects with two tenders having been completed for public private partnerships to assist in the development of stretches of highway in Slovakia, amounting to a total investment of circa: EUR 1.5 billion. Foreign-based consortiums are playing a leading role in these partnerships.

GDP growth in 2007 has been reported at a massive 10.6% with over 6% growth in GDP in 2008. In 2009, as in most Central European countries, the country’s growth contracted by 4.7% but most forecasts indicate a positive growth in 2010, one of only a few Central and Eastern European countries to be so. Exports have increased by expanding production in the motor car and electronic industries driven largely by Asian demand.

Inflation remains at low levels and given the impact of the economic downturn is expected to remain low. Historically the 12 month average until March 2010 was well below the level needed for the euro-entry in accordance with the Maastricht criteria at 1.025%.

Reforms

The current Slovak government elected in mid 2006 has been more cautious than anticipated in dismantling some of the previous government’s decisions. The reforms improved Slovakia’s appeal to foreign investors but were opposed by some citizens leading to the change in government. The government has forged good links with the business world and remains reluctant to amend any legislation that would be detrimental to foreign investors.

CIT Rate*

Tax rate

on Dividends

Slovakia

19.0

0.0

Hungary

16.0

0.0

Poland

19.0

19.0

Czech Republic

20.0

15.0

In 2008 the government passed reforms focused on research and development, education, employment, the business environment and energy policies with significant investment required. As a commitment to the EU’s green energy policy, Slovakia aims to produce 14% of national consumption using renewable energy.

Taxation %

TABLE 7

*Corporate Income Tax Rate Source: KPMG Slovensko spol. s r.o.

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©2010 KPMG Slovensko spol. s r.o. , a Slovak limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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