The lower house of Parliament on Monday approved a Senate proposal to postpone the introduction of a 21-percent value-added tax on building lost by one year. Senators argued that the introduction of the new tax could thwart sales of land that had already been arranged. The new tax will come into force in January 2016. The MPs on Monday also relaxed the rules for the newly introduced obligation to report VAT to the tax authorities; under the new rules, self-employed VAT payers will only be required to send in their reports every three months rather than each month.
In Business News this week: Czech agriculture shows record profit in 2014; state debt set to drop by 20 billion crowns; company owned by Finance Minister Babiš wins huge tender for logging and timber sale; Tatra Trucks posts profit of over 3.5 billion crowns; and Amazon will be renting 5,500 square metres of offices in Prague.
The Czech finance ministry wants to raise taxes on gambling to almost double the amount it collects from the industry at present. Companies currently pay the standard 19 percent corporate tax rate plus an additional sector tax of 20 percent of winnings. The finance ministry is proposing to raise the gambling tax to 40 percent as of 2016. The annual payment for one gaming machine will go up from the current 20,000 to 40,000 crowns.
The Czech Republic will get another chance to draw EU funds it had been allocated in the 2007 – 2013 period, Prime Minister Bohuslav Sobotka told Czech journalists at an EU summit in Brussels on Thursday night. At the summit, the Czech Republic and Slovakia managed to push through a plan that the European Commission and member states should try to secure a maximum use of the funds that failed to get spent. The prime minister said Czech ministries would launch talks with the Commission on the issue without delay. The Czech Republic has failed to use approximately 20 billion crowns worth of EU money this year.
The Czech Republic’s public debt should this year reach 1.663 trillion crowns, some 20 billion less than in the previous year, Finance Minister Andre Babiš said. If Mr Babiš’s estimate proves correct, the public debt would decrease for the first time since 1995. Mr Babiš spoke to reporters after meeting President Miloš Zeman on Wednesday. Mr Zeman had established a personal fund to decrease the public debt; the two officials destroyed a four-million state bond as the fund’s latest contribution towards the debt.
The Czech National Bank on Wednesday announced it would keep its interest rates unchanged at 0.05 percent, and would continue intervening against the Czech crown to keep the exchange rate at around 27 crowns per euro. Last month, the bank said it would continue intervening at foreign exchange markets until 2016, primarily to curb the risk of deflation. The bank’s key two-week repo rate has been kept at the historic low since November 2012. An analyst for the Home Credit loans provider quoted by the news agency ČTK said he was not surprised by the move, and suggested that foreign exchange interventions could possibly end in a year’s time.
The firm Uniles, part of the Agrofert Group owned exclusively by Finance Minister and ANO party leader Andrej Babiš, has won eight logging and sales contracts from the state-owned forestry firm Lesy ČR. That is more than any other company bidding for a total of 30 five-year contracts from the state-owned firm. Under the contracts, Uniles is entitled to annually log some 300,000 cubic metres of wood in state-owned forests. Mr Babiš has come under criticism over the contracts for his firm; the opposition Civic Democrats said this was a case of a massive conflict of interest.
The Czech National Bank has fined ČSOB bank for refusing to accept or exchange damaged notes, iDnes.cz reported. The CZK 300,000 fine comes three years after the central bank ordered ČSOB to take in damaged notes following complaints from customers of Česká pošta post offices, which with ČSOB cooperates. The Czech National Bank sent staff to attempt to use damaged notes at branches of Česká pošta, which runs ČSOB’s Era and Poštovní spořitelna accounts, and around a third were rejected.
Nearly 50 percent of Czech companies are planning to raise their employees’ wages next year, according to a survey conducted by the Czech Chamber of Commerce in around 500 firms all around the country. Only five percent of the companies that took part in the poll will be lowering their employee’s salaries next year.
The Czech power company ČEZ has confirmed that it will temporarily halt operations at its coal burning plant in the sea port of Varna, Bulgaria as of the beginning of next year after it failed to bring the plant up to EU environmental rules. ČEZ said it had been denied an exemption by the European Commission and the plant cannot continue to work without an environmental upgrade after December 31st. With a generating capacity of 1,260 megawatt, the plant serves as a back-up to the national power grid and the Bulgarian authorities have stressed the importance of keeping it in operation, pointing out it could become a much needed source of energy if Bulgaria were to be hit by a gas crisis.
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