1. Personal income tax
- Reduction of the marginal tax rate, extension of tax bands.
- Tax allowances should be deductible directly from the tax liability.
- Lump sum expenses should be widely used for small entrepreneurs with low turnover; lump sum tax may be introduced.
2. Corporate And Personal Income Tax
- Faster depreciation of progressive technologies and production buildings.
- Tax relief to leases should be similar to assets acquired by purchase.
3. Accounting
- All VAT taxable persons will be obliged to use double entry bookkeeping.
4. Excise Tax
- Excise tax on petrol, oil, and tobacco products will be further increased.
- The excise tax on grape wine should be cancelled.
5. Value Added Tax
- The lower rate of 5% VAT should be used only for foodstuff and construction works.
- Registration will be obligatory for taxpayers with annual turnover over Kc 2 million.
6. Real Estate Tax
- Real Estate Tax rate should be determined by the municipalities. The tax period should be extended to two years. Generally, this tax is expected to increase.
7. Transfer Taxes
- The tax base assessment should be simplified and for real estate it will be identical to the real estate tax base.
- Tax exemption will be increased to Kc 1 million for movables and Kc 1 million for immovables for close relatives.
8. Investment Incentives
According to the proposal submitted to the Government, the following incentives would be available:
- 5-year interest free tax deferral,
- tax subsidies,
- favourable VAT treatment,
- interest free loans for financing training costs of Czech employees.
The incentives will apply to those who invest at least $25m into processing industries (as defined in the OECD listing).
It is expected that the proposal will be discussed by the Parliament in April.
9. Mortgages
According to the proposal submitted to the Government, mortgages should be made available also to municipalities. The subsidy to mortgage interest payable to individuals (which is given through a reduction in interest paid) should increase to 4%. If the interest rate is less than 10%, the subsidy will be reduced and will be nil when the interest rate is lower than 6.99%.
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