Global

Details

  • Service: Tax, International Corporate Tax, Global Indirect Tax, Global Transfer Pricing Services, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 12/18/2012

Czech Republic - VAT rate changes; tax administration reorganization 

December 18: Recent tax developments in the Czech Republic include the following legislative and judicial developments:
  • Possible value added tax (VAT) rate changes beginning January 2013 - VAT rates (proposed to be effective beginning 1 January 2013) are under legislative consideration; as proposed, the VAT rates could either be 21% and 15%, could be maintained at current rates, or subject to a uniform VAT rate of 17.5%.
  • Reorganization of the tax authorities - The current number of financial authorities (199) will be replaced by 14 authorities for the separate regions, with central offices in regional cities. Some existing financial authorities will become local branches of the regional financial authorities.
  • Reduced time in which to register for tax - Beginning January 2013, the deadline for filing the application to register for tax is reduced from 30 days to 15 days, measured from the date when the decisive legal criteria are met.
  • “Second pillar" of pension reform - Employees who opt for the "second pillar" must conclude a pension savings agreement with a pension company of their choosing. The pension company then will notify the administrator of the Central Register of Contracts who in turn will notify the employees when the contract has been registered.
  • Changes in employment tax - Employers need to be aware that certain employment tax changes are pending and could be effective in 2013. Currently, it is not known whether certain legislative amendments will actually be passed.
  • New instructions on transfer prices for services between related parties - The instructions aim to unify the application of tax rules for evaluating services with low “value added,” and to reduce administrative burden when supporting the correctness of transfer pricing for such services.
  • Court finds contractual price can only be increased if explicitly agreed beforehand - Any price agreement also includes VAT, the Constitutional Court found. This means that the agreed price cannot be unilaterally increased by VAT, even if both parties are VAT payers.

Read a December 2012 report [PDF 322 KB] prepared by the KPMG member firm in the Czech Republic: Financial Update (December 2012)




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