Czech News - December 1997 - Customs Tariff

The Government approved the amendment of the customs tariff that decreases customs duties for 8,000 items (from the total of 10,700 items). The new customs tariff entered into force on 1 January 1998.

As a consequence, the average customs duty tariff falls from 3.8% to 3.3%. In particular, duties of oil and glass products, lorries, furniture, etc. were decreased.

Draft amendment to the Chart of Accounts and the Accounting Procedures for Entrepreneurs

The Ministry of Finance prepared an amendment to the Chart of Accounts and the Accounting Procedures for Entrepreneurs.

This amendment will be effective from 1 January 1998.

The main areas covered by the amendment are as follows:

• Option premium will generally be taken into the profit and loss account (as income or expense) at the moment either of exercise or of expiry (if the option cannot further be exercised) of the option. The exception to this is for option premium paid for an exercised call option, which will be accounted for as an increase of the acquisition price of the underlying asset.
• Interest income subject to withholding tax will be accounted for as a financial revenue in the gross amount (i.e. including the tax withheld) whereas, before 1998, the interest revenue was accounted for in the net amount. The tax withheld that can be credited against the final tax liability shall be accounted for as a tax prepayment.
• Accounting value of a financial investment: if the investment is created through an in-kind contribution where the accounting value of that contribution is negative (assets are less then liabilities), the financial investment is valued at zero and the negative difference is accounted for as a revenue. The contribution itself is recorded off-balance sheet.
• New off-balance sheets accounts are introduced to record options and derivative transactions. However, no guidelines on their accounting treatment are given.
• Year-end exchange rate differences will not be recognised for foreign currency receivables where statutory provisions are created.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

For further information on the above, please contact Mr Richard Fletcher by telephone on +420 2 2440 1300 or E-mail directly to richard.g.fletcher@arthurandersen.com