This lower house of Parliament this week adopted a number of key draft laws that will directly affect most businesses operating in the Czech Republic. To begin with, MPs softened a ban on the so-called "Svarc system" - the practice popular among employers of stringing together temporary contracts to avoid hiring full "employees". By hiring "temporary" workers in this way, companies can save as much as $4,000 per person each year in social and other taxes. Under the draft law, a construction firm, for example, is now free to hire a carpenter in back-to-back contracts to work at home using his own tools, but the firm must make him an employee if the same carpenter comes to the work site and uses the firm's tools. Deputies also gave final approval to a law for standardizing and speeding up the process of making entries in the commercial registry. If the process takes longer than five days, the entries will now become automatic. A proposal to introduce cash registers with fiscal memory for entrepreneurs as of January 2007 also was passed. The idea is to ensure that taxes are paid on all cash transactions. Deputies also approved a "squeeze-out" provision that allows owners of 90 percent or more of stock in a company to force small shareholders to sell their stakes, at a price determined by an appraiser appointed by the majority owner.
Meanwhile, a study by the World Bank has shown that creditors in the Czech Republic suffer the worst rate of return among all 25 European Union countries when dealing with bankrupt debtors. On average a creditor in the Czech Republic gets back only 17 percent of the amount owed; in Finland, the return is more than 90 percent.
And speaking of bankruptcies, Health Minister Milada Emmerova will reportedly ask the government to have the state bailout agency, Ceska Konsolidacni agentura, to take over some $175 million dollars worth of debt owed by VZP, the state's General Health Insurance Company. VZP's total debt reached some $390 million dollars last year and the health insurer is seriously behind in reimbursing Czech doctors for treating patients. Finance Minister Bohuslav Sobotka, however, has said he is against any on-time debt repayment without a comprehensive plan to reform the health care sector in place.
We end on a positive note: The Czech foreign trade balance posted a 6 billion crown surplus in March, or the equivalent of about $230 million dollars. It was the best result for the month since 1993, and confirms a long-term favourable trend, said the Minister of Industry and Trade. Car and machinery exports accounted for the bulk of the surplus. The Czech currency strengthened on the news, to 23.12 crowns to the US dollar.
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