VAT11/06/11 / cata_tax-news

Increased Rate

The government approved an increased VAT rate at a meeting held on 25 May 2011. Effective 1 January 2012, the reduced VAT rate is to be increased from 10% to 14% and from 1 January 2013, the basic and reduced VAT rate is to be unified in the amount of 17.5 %.

In connection with the increased VAT rate, a change to the Income Tax Act was proposed. On grounds of alleviating the impact of the increased VAT rate, the amendment proposes to increase the tax advantage for a dependant child by CZK 1,800, from the current CZK 11,604 to CZK 13,404 for a 12-month period. The increased tax advantage may be claimed from 1 January 2012.

The Chamber of Deputies is currently discussing the above-mentioned proposal.

Technical Amendment

The Ministry of Finance submitted a so-called technical amendment to the VAT Act for external consultation procedures. The amendment is expected to become effective from 1 January 2012.

The cited amendment changes, for example, the conditions under which a person obliged to pay tax becomes a taxpayer as well as related conditions for tax registration. Changes were proposed in respect of the moment of the obligation arising to file tax in case of receiving service from a person who is domiciled or with registered office in a foreign country but renders performance in the Czech Republic. Rules for tax documents for provision of services by persons not settled in the Czech Republic are to be unified as well.

In connection with corrections to a tax base and tax, a change of details for a corrective tax document was proposed. The change is intended to relate to cases where the correction relates to more than one taxable performance. The amendment also resolves the application of exchange rates in cases where the correction relates to more than one taxable performance rendered in a foreign currency.

The amendment allows the tax payer to decide, in case of transfer of real estate, to apply tax even after expiration of a three-year period (a five-year period has been newly proposed) from the issue of the first occupancy permit.

It proposes the payer, in case of a tax document on the basis of which he/she raises a claim for tax deduction, may prove the particulars of the document, such as the tax identification number and data decisive for the calculation of the tax, in another way.

The 10-year period for the change of the tax deduction is supposed to newly apply to the technical improvement of real estate.

The amendment specifies rules for situations where fixed assets subject to the change for claiming tax deductions are sold.

A new change of the special regime for travel service was also proposed.

The taxation period for persons registered for VAT was changed to a monthly basis.

In view of the fact that this technical amendment contains a relatively large number of changes, it may be assumed, pursuant to the reactions of the professional community, that it will be subjected to many further changes in comparison with the proposal.