The Slovenia Times

Govt drafts investment promotion bill


After the end of the public consultation period, the Ministry of Economic Development and Technology plans to harmonise the document with the other ministries in September, so that it could be adopted in October and passed in parliament at the beginning of 2018.

The long-awaited bill is expected to define the objectives, forms of incentives, conditions, criteria and procedures for the awarding of incentives for initial investments and creation of jobs. It should also define other investment promotion activities.

The bill is a response of sorts from the ministry to the criticism that the government lacks a systemic legislative tool for the promotion of domestic and foreign investments, and that by adopting a special law for the planned paint shop by Magna Steyr near Maribor, it discriminates other investors.

The draft bill divides investment incentives relative to the value of investment, the number of jobs it could potentially create and added value. They can be awarded for an investment into a new or an existing company.

Among the existing incentives, the draft bill sets down the general investment break from the corporate income tax act in the amount of 40% of the invested amount and a 70% investment break and other incentives for problematic areas around the country.

Companies making investments are already allowed to purchase state-owned real estate under the appraised price in accordance with the law regulating the management of real estate of the state and municipalities.

At the local level, companies can compete for incentives such as exemption from payment of public utility charges, purchase of municipality-owned real estate below the appraised price and the awarding of building ownership rights without compensation.

Investment incentives regulated by the emerging bill can come in the form of grants, subsidised interest rates, refundable loans, guarantees, the purchase of land below the appraised price and help in securing the conditions for the implementation of a strategic investment.

The latter means that real estate could be expropriated for the needs of a strategic investment, but this would be permitted only in case the investment represents a public good on the basis of public interest, which is defined in detail by the bill.

Investment incentives can be awarded for initial investments in manufacturing activities if the investor creates at least 25 new jobs and if the value of the investment is at least one million euros.

In the development of software, data processing, tourism and logistics services, the investor should creates at least 10 new jobs, the investment should be worth at least EUR 400,000 and services should be sold in at least three countries.

To get incentivised by the state, investments in research and development (R&D) must create at least five new jobs and must be worth at least EUR 500,000.

Other major criteria for incentives are the position and recognisability of the investor on the market, transfer of technologies, know-how and experience, long-term position of the investment in the region, the environmental impact and its contribution to Slovenia's transition to a circular economy.

The bill also divides investments into initial investments which significantly contribute to the development of the Slovenian economy and into strategic investments.

The former are investments in the manufacturing sector whose value is at least EUR 15m and where investment into machinery and equipment represents at least 50% of total value, investments in the services sector worth at least EUR 500,000 and investments in R&D exceeding EUR 3m, with investment into machines and equipment representing at least 50% of total value.

Under the job creation criteria, such investments must create at least 50 jobs in three years in manufacturing, at least 40 jobs in the services sector and at least 20 jobs in R&D. These jobs must include at least ten highly qualified jobs in all three segments.

Defined as strategic investments are investments which are in the public interest from the aspect of economic development. To be incentivised, their value must be at least EUR 40m in manufacturing or services sector and at least EUR 20m in R&D.

In ten years following the conclusion of the contract they have to create at least 400 jobs in manufacturing or services sector and at least 200 jobs in R&D, while making sure that the created jobs are preserved for at least five years.

The draft was sent into a public consultation period until the end of July.


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