Changes to acts in connection with the single collection point

The Ministry of Finance submitted for external consultation procedures a governmental bill on changes to acts in connection with a single collection point.

Most likely from 1 January 2013, the payment of all taxes, customs duties and social security contributions, state employment policy contributions, general health insurance contributions and legal injury insurance is expected to be concentrated in a single collection point.   

The cited bill amends a total of 67 legal regulations that inter alia consists of the Income Tax Act, VAT Act, Acts on Reserves, Tax Rules, Financial Administration Act, which is currently being discussed by the Chamber of Deputies, Labour Code and others.

Significant proposed changes include changes to the Income Tax Act. We briefly state some of these changes.

Changes to taxation of individuals

• Cancellation of the concept of the so-called “supergross wage” and, in relation thereto, an increase in the personal income tax rate from the present 15% to 19%.
• Persons with a monthly income exceeding the average wage by four times may not apply the basic tax relief.
• Reduction of the support for own housing by reducing the existing maximum tax deductible amount of interests on funds used for financing of such housing from CZK 300,000 to CZK 80,000. It was simultaneously proposed that the above-mentioned amount should not be reduced pursuant to the months in which the payer paid the interests.
• Cancellation of exemptions in case of a number of employee benefits; such cancellation should be compensated by introduction of a special tax relief for employees in the amount of CZK 3,000 per year.

Changes in taxation of corporate income

• Cancellation of certain tax benefits, such as cancellation of an investment incentive in the form of a tax relief and cancellation of tax exemption of income of a debtor in a reorganization;
• Introduction of a tax relief in the amount of the withheld tax on dividends; the tax relief can be applied in subsequent taxation periods without limitations.
• Zero taxation of collective investment entities and consistent taxation of payments from the collective investment system.

Tax on total wages

• Introduction of a tax on total wages in the amount of 32.5% for payers of employment income; the tax is supposed to include the current pension insurance contributions, health insurance contributions, public health insurance contributions paid by the employer, injury insurance and contributions for the state employment policy.

Changes are also expected to occur in the social security and health insurance contributions. Such changes are expected to apply to employees as well as to gainfully self-employed individuals. In the field of public health insurance, the same contributions rate in the amount of 6.5% is expected to apply to employees as well as to gainfully self-employed individuals, and in case of employers, the rate is expected to be reduced from the current 9% to 7%. In the field of social security contributions, the rate is expected to be unified for both employees and gainfully self-employed individuals in the amount of 6.5%. The base of the public health insurance and social security contributions of gainfully self-employed individuals is expected to be 100% of the tax base in comparison with the current 50%.