7 August 2019
Last month’s tax and legal news in a few sentences.
DOMESTIC NEWS IN BRIEF
- Late July, the Senate passed an amendment to the Investment Incentives Act. The bill is now waiting to be signed by the president and will enter into effect on the 15th day after its promulgation in the Collection of Laws.
- The Senate rejected a draft amendment to the Act on the Electronic Reporting of Sales. The amendment is now going back to the Chamber of Deputies, which will have to pass it by a simple majority of all votes.
- The government discussed a bill amending certain laws to implement EU regulations in the area of double taxation. The most important changes concern the Act on International Cooperation in Tax Administration, which implements into Czech law the EU Directive on Administration Cooperation in the Field of Taxation (DAC 6).
- Following the amendment to the VAT Act effective 1 April 2019, the General Financial Directorate (GFD) amended its information on the application of the unreliable person concept. The changes are mostly of a technical nature, such as references to the current numbers of the laws’ sections. The information also reflects that the law now explicitly stipulates that the middle (intermediate) party in a triangular transaction may also be a person identified for tax.
- The GFD published its information for taxable persons not established in the Czech Republic, summarising the basic facts about these persons’ registration for Czech VAT. Special attention is paid to VAT aspects of sending goods to end customers/non-payers (typically by e-shops).
- An amendment to the Valuation Decree was published in the Collection of Laws under No. 188/2019. Coll.
- An amendment to the Act on the Residence of Foreign Nationals in the Czech Republic effective 31 July 2019 was published in the Collection of Laws under No. 176/2019 Coll.
- An amendment to the Consumer Protection Act published under No. 179/2019 enters into effect on 16 July 2019.
- The Ministry of Labour and Social Affairs website (www.mpsv.cz) and its integrated portal (portal.mpsv.cz) have a new visual format. The log-in systems using the e-identity system (NIA) or the data boxes information system will change as well. Changes also affect users working with electronic forms. This mostly concerns the pre-filling of forms, dynamic hiding/showing of blocks based on filled-in data, and collective sending support. The new portal solution has been available to the public since 28 June 2019 at web.mpsv.cz and web.uradprace.cz.
- The Ministry of Labour and Social Affairs has noted that the electronic sick note project has successfully proceeded to the next stage of preparations and should enter into effect from 1 January 2020. At the moment, external communication is being tested with the help of SW developers of 20 companies that create specialised software for hospitals and doctor’s offices. A shared e-mail address is available to the SW developers, as well as detailed information on the CSSZ website, including a regularly updated file with the most frequent questions. In line with the work’s progress, the ministry also launched an RSS channel linked to an update section for SW developers. Anybody who needs to be informed on the progress may subscribe to the channel.
- The Ministry of Finance initiated a comment procedure on the digital tax bill. The bill introduces a 7% tax for companies with global revenues over EUR 750 million per year who generate revenues in the territory of the Czech Republic of at least CZK 50 million in a calendar year from services in three specified areas: placement of targeted advertising on a digital interface; uses of multi-sided interfaces; and sale of user data. This is the DST model of a digital tax as previously proposed by the European Commission. The bill is expected to enter into effect in the middle of 2020, depending on the legislative process.
FOREIGN NEWS IN BRIEF
- The British personal data protection authority – the Information Commissioner’s Office (ICO) has proposed a penalty of CZK 5 billion to British Airways for insufficiently protecting its passengers’ personal data: the personal data of approximately half a million of passengers were leaked as a result of redirecting from the company’s website to a fraudulent website. Marriot hotels also face a penalty for leaking the personal data of more than 339 million guests; in this case, the ICO has proposed a penalty equal to CZK 2.7 billion.
- On 4 July, Finland’s programme for its EU presidency was published. As regards taxation, Finland will focus on combating aggressive tax planning and tax evasion to reduce the harm caused by tax competition. Furthermore, it will address the issue of taxation of the digital economy.
- On 28 and 29 June, G20 leaders gathered in Osaka, Japan, to discuss the international tax system and the impact of the digital transformation on economies worldwide. The leaders concluded the summit by recognising the progress made towards resolving tax challenges that arise from digitalisation, and committed to reach a unanimous resolution by 2020.
- A bill introducing digital services tax (DST) was adopted by the French Senate. The tax will apply retroactively from 1 January 2019. In this respect, an investigation into its alleged discriminatory nature against US companies was initiated by the US trade representative.
- In July, the UK Government published draft legislation and guidance on the new digital services tax to be included in Finance Bill 2019-20. At the same time, a policy paper on the introduction of the new tax was published by the HMRC.