Anti avoidance tax policy in SR

Introduction

The determination of tax income made by separate entity approach and different corporate tax rates in particulars countries results into strong incentives of multinational companies to situate taxable profits to low-tax affiliates. That is the reason why the legislation of many countries including Slovak Republic consists of specific anti-avoidance rules in order to eliminate tax strategies planning in multinational companies. The most anti-avoidance tax policy rules are Thin Capitalization rules, Controlled Foreign Company rules and Transfer Pricing rules. During the last decades, the number of countries using mentioned rules, has notable increased. In 1996 , those rules were implemented only in nine countries of European Union. Today, they are used by twenty-three members of European Union. The Slovak Republic legitimated only Transfer Pricing rules. In terms of Thin Capitalization rules, they were legitimated in 1993, but in 2004 as a part of Slovakian tax reform, were abolished. Third implement of anti-avoidance tax policy, Controlled Foreign Company rules, were never legitimized in Slovak Republic.