Newly Submitted Bills29/10/09 / cata_tax-news

Amendment to the VAT Act; amendments to Tax Regulations in the “Governmental Package”

  • Based on the schedule of the Chamber of Deputies,  we expect the amendment to the VAT Act implementing EU directives to be approved on 4 November 2009 (Parliamentary print No. 887/0, see Tax News No. 6/2009).  The amendment will be also subject of the discussion in the Senate and the President’s signature. The amendment takes effect from 1 January 2010.

Amendments to Tax Regulations in the “Governmental Package”

The Chamber of Deputies approved the government bill amending certain acts in connection with the bill on the 2010 state budget of the Czech Republic (Parliamentary print No. 917, “Governmental Package”). The Act was already approved in the Senate and published in the Collection of Laws under no. 362/2009. The approved changes apply to the following tax regulations:

  • Chapter One of the Governmental Package amends real estate tax, doubling the real estate tax rate but excluding rates for arable land, permanent grass land, economic forests and lakes with intensive and industrial fish farming. Pursuant to the draft amendment filed in the course of approving the act, municipalities are permitted to determine new coefficients for 2010 if the decree stipulating the coefficients is adopted by 30 November 2009. In view of the effectiveness of the bill, it may be difficult if municipalities change the coefficients for 2010 that were already determined by the previous legal deadline of 1 August 2009.
  • Chapter Two of the Governmental Package amends income taxes, changing lump sums for entrepreneurs once more within a short period of time. The deputies approved yet another increase in the lump sums for entrepreneurs, the increase of which was already approved in June 2009 (see Act No. 289/2009, Coll.), in order to support economic growth. The increased lump sums are newly changed for certain groups of entrepreneurs. The lump sums increased earlier, in June, shall apply only to 2009 and their amounts shall be amended again starting from 2010.
  • Chapter Four of the Governmental Package amends the Excise Tax Act, increasing excise tax rates on all types of selected products starting 1 January 2010. The excise tax on fuel shall newly increase by approximately CZK 1 per liter and excise tax on spirits shall newly increase the price of 0.5 l of 40% alcohol by approximately CZK 5, including VAT. The rates of this tax are determined in CZK per hectoliter of ethanol. The excise tax on beer shall newly increase by CZK 8 per hectoliter per percent of extract from the original hopped wort, which is approximately CZK 0.50 per half liter of 10° beer. In the case of excise tax on cigarettes, smoking tobacco and other tobacco, the fixed and percentage portions of the tax shall newly increase by  CZK 0.04 per piece and 1%, respectively. The excise tax rates on smoking and other tobacco shall newly increase by CZK 70 per kilogram.
  • Chapter Five of the Governmental Package amends the VAT Act, changing VAT rates from 1 January 2010. The reduced 9% rate is to be newly increased to 10% and the basic 19% rate is to be newly increased to 20%.  The rate valid at the time of making the payment shall apply to amounts received until 31 December 2009 in respect of performance taking place after 1 January 2010.

The proposed governmental bill must be discussed and approved by the Senate and signed by the President. The proposed date of effect of the act and the individual tax amendments is from 1 January 2010.

In the remaining amended provisions, the following changes were approved:

  • The amendment to the Act on Social Security and Contribution to the State Employment Policy newly increases the maximum assessment base for the social security contribution for employees and self-employed individuals in 2010 from the existing 48-multiple of the average salary to a 72-multiple and newly cancels the employer’s possibility to apply deductions from the social security contributions. The last time such deductions can be applied is December 2009.  In 2010, the health insurance contributions paid by employers shall not be reduced but remain at 2.3%.
  • On the basis of the amendment to the Act on General Health Insurance Contributions, the maximum assessment base for payments of such contributions for employees and gainfully self employed individuals newly increases the existing 48-multiple of the average salary to a 72-multiple starting 1 January 2010.
  • On the basis of the amendment to the Health Insurance Act, the percentage rate for determination of the daily amount of sickness benefits shall be temporarily unified for 2010 in the amount of 60%, i.e. the preferential treatment of long-term sickness leaves (quarantines) will be canceled. For 2010, maternity pay shall be shortened to the same amount as sickness benefits. For 2010, the supported nursing benefits period shall be shortened and nursing benefits be paid from the fourth day of nursing or care. It applies to all the above-mentioned benefits that if a claim to such benefits arose before 2010, the amount thereof for 2010 shall be adjusted in accordance with the approved changes.
  • On the basis of the amendment to the Act on State Social Support, the existing amount of the state financial aid for 2010 shall be reduced. The amount of the parents’ benefits and maternity grant has not changed compared to the government’s proposal.
  • On the basis of the amendment to the Employment Act and act on support of economic growth and social stability, the previous legal regulation, consisting of temporary increase of unemployment benefits, requalification support and extension of the unemployment support period, was abolished prior to the amendment taking effect.