INVESTMENT AID WHAT IS INVESTMENT AID q OBJECTIVE

INVESTMENT AID

WHAT IS INVESTMENT AID ? ? ? q OBJECTIVE: TO ENCOURAGE DIRECT INVESTMENTS -IN LESS DEVELOPED REGIONS -WITH HIGH ADDED VALUE q ELIGIBLE INVESTMENTS: INDUSTRIAL TECHNOLOGY CENTER SSC q ADMINISTRATIVE BODY: MINISTRY OF ECONOMY q FINAL DECISION ON AID: SLOVAK GOVERNMENT q LEGAL FRAMEWORK: ACT ON INVESTMENT AID

INVESTMENT AID GRANTED IN 2002 -2011 q q q 118 SUPPORTED PROJECTS 6. 37 BILLION € OF INITIAL ELIGIBLE INVESTMENTS 42. 731 OF DIRECT NEW JOBS q 1. 26 BILLION € OF AID GRANTED q 19, 8% - AVERAGE AID INTENSITY q q 29 ths EUR - AVERAGE AID PER JOB CREATED 40% - SHARE OF TAX RELIEF FROM AID GRANTED

INDUSTRY – MINIMAL REQUIRENTS TO APPLY FOR AID q NEW PLANT OR EXPANSION q MIN. INVESTMENT TO LONG-TERM ASSETS DURING 36 MONTHS EUR 14 MIL. , 7 MIL. or 3. 5 MIL. q MIN. SHARE OF NEW MACHINERY - 60%, 50% or 40%

INDUSTRY – MIN. INVESTMENT & SHARE OF NEW MACHINERY

TECHNOLOGY CENTER – CONDITIONS - CENTER FOR INOVATIONS OF PRODUCTS AND PROCESSES q NEW CENTER OR EXPANSION q MIN. INVESTMENT TO LONG-TERM ASSETS EUR 0. 5 MIL WITHIN MAX. 36 MONTHS (new technology equipment, building, land, licenses. . . ) q AT LEAST 60% OF NEWLY CREATED JOBS FOR EMPLOYEES WITH UNIVERSITY EDUCATION

SHARED SERVICE CENTER – CONDITIONS - center which provides services with a high added value, employs qualified experts in SOFTWARE DEVELOPMENT CENTRE, EXPERT SOLUTION CENTRE, HIGH-TECH REPAIR CENTRE, CUSTOMER SUPPORT CENTRE, HEADQUARTERS OF MULTINATIONAL CORPORATIONS q NEW CENTER OR EXPANSION q MIN. INVESTMENT TO LONG-TERM ASSETS EUR 0. 4 MIL WITHIN MAX. 36 MONTHS (new technology equipment, building, land, licenses. . . ) q AT LEAST 30% OF NEWLY CREATED JOBS FOR EMPLOYEES WITH UNIVERSITY EDUCATION

AID IS CALCULATED FROM. . . ELIGIBLE ARE COSTS OF: q LAND q BUILDINGS q NEW MACHINERY & TECHNOLOGY EQUIPMENT q LICENSES & PATENT RIGHTS OR q WAGE COSTS OF NEW EMPLOYEES DURING 2 YEARS

FORMS & INTENSITY OF THE AID q INCOME TAX RELIEF for 10 tax periods - PREFERRED FORM OF THE AID ------ q CASH GRANT (paid ex post) q CONTRIBUTIONS ON NEW JOBS (paid ex post) -DEPENDS ON SITUATION IN THE STATE BUDGET, USUALLY APPLICABLE ONLY IN DISTRICTS WITH HIGHER UNEMPLOYMENT ------ -THE TOTAL AID IN ALL FORMS CANNOT EXCEED THE MAX. INTENSITY IN THE DISTRICT

MAX. AID – INDUSTRY

MAX. AID - TC & SSC:

MILESTONES WORKS ON PROJECT CAN START EVALUATION SARIO 30 days SUBMISSION TO Mo. E 10 days DRAFT OF AID OFFER Mo. E 20 days STATEMENT Mo. E AID OFFER Mo. E 30 days APPROVAL GOVERNMENT 30 days EVALUATION MINISTRIES ACCEPTANCE INVESTOR

EXAMPLE INDUSTRIAL INVESTMENT : 20 M EUR , 300 NEW JOBS REGION: DISTRICT POPRAD (ZONE C) – MAX. INTENSITY 38% MAX. AID = 38% * 20 = 7, 6 M EUR MAX. AID IN PART. FORMS: 10 y TAX RELIEF = 3, 7 M EUR CASH GRANT = 12% * 20 = 2, 4 M EUR CONTRIBUTIONS ON NEW JOBS = 5 ths EUR * 300 = 1, 5 M EUR

EXAMPLE SSC PROJECT: 1 M EUR INVESTMENT, 150 NEW JOBS (WAGE COSTS= 150*24 MONTHS*1000 Eur= 3, 6 M Eur) REGION: DISTRICT B. BYSTRICA (ZONE D) – MAX. INTENSITY 40% MAX. AID = 40% * 3, 6 = 1, 44 M EUR AID IN PART. FORMS: CONTRIBUTIONS ON NEW JOBS = 5 ths EUR * 150 = 0, 75 M EUR TAX RELIEF = 0, 69 M EUR (BASED ON CALCULATION)