He says that prior to EU accession, the country also attracted more foreign investment than its peers in the Visegrad bloc, which consists of Poland, Hungary, the Czech Republic and Slovakia. Havlát agrees, noting that after 2000, proportionate to GDP Slovakia lured more foreign direct investment (FDI) than numerous other OECD countries. ‘It has helped keep investment coming into the Czech Republic and benefited the economy.’ It sent a signal that it was a good location for inward investment and helped the country earn top spots in tax competitiveness indices,’ explains Bryan McSweeny, senior tax manager at Mazars Czech Republic.

‘It was was generally very good for the Czech Republic’s image abroad. In 2008 the Czech Republic set personal income tax at 15%. In fulfilling the key goals of boosting the economy and attracting foreign investment, observers broadly agree that the new arrangements worked well. With this reform, Slovakia became the first OECD country to have a flat personal income tax.’ Altered image Michal Havlát, director for tax revenue and fiscal analyses at the Slovak Ministry of Finance, says: ‘Before, the personal income tax system had five income brackets, and the corporate rate was at 25%. Slovakia was first to introduce it, in 2004, setting personal income tax, corporate income tax and VAT all at 19%. The three countries saw the flat tax as an opportunity to boost their economies and attract foreign investment.

Countries with flat tax