Taxation in East Europe and the ex-USSR
Tax Trends
[Legislation Update]
By Lynda L. Maillet

The countries of Central and East Europe have all undertaken major overhauls in their systems of taxation in the last year or so. Western-style profit and income taxes were unheard of in these countries only a few years ago when the state merely appropriated the "profits" of enterprises which it owned. Now, as privatization is gaining speed in the region, almost all of these countries have adopted Western-style taxes in order to beef up government revenue which is no longer received from the dwindling state sector. In general, tax authorities in these countries are few and under trained. Laws are changed and updated frequently, especially in the former Soviet Union (FSU), where the high rates of wage inflation render tax brackets obsolete very quickly.

What follows is primarily a discussion of aspects of corporate taxes, income taxes, value-added taxes and tax incentives of interest to foreign investors that have been adopted in several countries in Central and East Europe. As always, prospective investors should pay close attention to the evolving taxation systems, and regulatory environment generally, in the region....

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