US Steel Threatens Slovakia With Legal Action
The legislation introduced in November 2011 by finance minister Ivan Miklos to levy an additional tax on CO2 emissions didn’t go down very well with big companies in Slovakia, and now U.S. Steel Slovakia is considering taking legal action against the Slovak Republic over the legislation.
The legislation took effect on 1 January 2012 and introduces a special emissions tax on companies receiving CO2 quotas, which minister Miklos feels were handed far too generously to cronies under the former government of Robert Fico for the 2008-2012 period. Excess emission quotas represent a source of easy money for companies as any surpluses can be sold off, with the total value of quotas in the above period coming to EUR 660 million.
Daily Hospodarske Noviny reported yesterday that the company had sent an official letter of complaint to various government bodies demanding that the legislation be scrapped, saying it might otherwise pursue remedy via international arbitration. Other disgruntled companies have already filed motions with the European Commission and the Constitutional Court in Slovakia to examine the legitimacy of the tax, and the association of large employers Klub 500 claims the legislation is at odds with European directives and will harm businesses in Slovakia.
Miklos’s legislation will see surplus emissions taxed at a massive 80% of their value, by which he hopes to rake back around EUR 150 million for the state by taxing some 133 companies in this way. If the issue goes to international arbitration, there is a good chance of investors being successful based on the principle on protection of investments.