Survey: Czech tax environment not supportive of business
Almost two thirds of finance managers do not consider the Czech tax environment favourable for business activities and more than half of them view the changes made in the last two or three years as negative. In their opinion, the most negative is the VAT ledger statement, imposing an even greater administrative burden on corporations. Such are the results of KPMG Czech Republic’s survey of 339 finance managers.
Only 36% of the respondents regard the tax changes of the last two or three years as positive. According to 48%, business entities are most burdened by VAT ledger statements. The electronic reporting of sales (22%) and the separate appendix to income tax returns showing a summary of transactions with related parties (14%) come next. Respondents are in disagreement about the reverse-charge mechanism: more than one third of managers would welcome its implementation on a global basis; in contrast, almost every ninth manager believes that the expansion of the reverse-charge mechanism would be the most burdening tax change in recent years.
Czech finance managers see the highest risk of an additional tax assessment in transfer pricing (41%). In contrast, more than one fifth does not fear any additional assessment of tax; one sixth is worried about their ability to prove the deductibility of their expenses.
According to the survey, the lack of communication with the tax administration is another problem. Only 6% of business entities claim to have learned about changes in tax legislation from the tax administration. One fourth of them would welcome the expansion of binding rulings on any unclear tax issues, which would help them obtain certainty for their future operations. The business environment is developing rapidly, making it very hard to fit new investment and financing concepts into a 1990’s tax framework primarily designed for traditional manufacturing companies.