News in brief, August 2020
Last month’s tax and legal news in a few sentences.
5 August 2020 In brief
DOMESTIC NEWS IN BRIEF
- The Ministry of Labour and Social Affairs is finalising its preparations for its version of kurzarbeit, designed to help companies forced to partly restrict their operations in a crisis. Over a maximum of nine months, the state should provide employees of companies fulfilling the stipulated conditions with 60–80% of their net wage depending on the employee’s activity and time spent within the kurzarbeit regime. Unlike the one-off support provided within the Antivirus programme, kurzarbeit should launch automatically when the Czech economy encounters any crises similar to the current COVID-19 pandemic.
- On 20 July 2020, the government approved the first investment incentives project since the 2019 amendment to relevant legislation. The approved project was submitted by Shimano Czech Republic, a manufacturer of bicycle parts, for the extension of its production in the Moravian-Silesian region. The government granted the requested tax relief incentive as the project is intended to benefit the Karviná region with its high level of unemployment and ongoing structural changes due to the reduction of coal mining.
- In accordance with Decision of the European Commission No. 2020/1101, the deadline for exemptions from customs duties and VAT of imported goods necessary to fight the consequences of the spreading of the new coronavirus COVID-19 was extended until 31 October 2020. Exemptions of imported goods from customs duties and VAT only concern state-owned entities, charitable organisations and rescue units. For this reason, the terms and conditions for exemption from customs and VAT of goods imported from a third country in relation to the SARS-CoV-2 pandemic effective from 7 April 2020 have been updated.
- On 24 July 2020, the European Commission published its draft amendments to the regulation stipulated within the Capital Markets Union (CMU) initiative, responding primarily to the recent COVID-19 pandemic and intending to curtail the adverse consequences of the pandemic. The EC has also published a draft concerning the regulation of benchmarks. The draft regulation concerning benchmarks relates to the end of the applicability of the LIBOR (the London InterBank Oﬀered Rate) benchmark at the end of 2021.
- The financial administration published the results of its financial inspections focusing on public administration. Inspecting 3,332 public administration authorities, it in particular looked at breaches of budgetary discipline, facts indicating the commitment of a crime associated with funds and assets management, adherence to the Public Procurement Act, and compliance with legislation regulating accounting and the record keeping and collection of receivables.
- A review of the capital markets regulation will also change the consequences of insufficient assessments of creditworthiness. Consumer objections will no longer be limited by a deadline of three years after contract conclusion. Tax and Legal Update has dealt with this issue in this previous article.
- The law implementing some EU directives governing taxation (primarily reporting of cross-border arrangements within DAC 6 and VAT Quick Fixes) was signed by the president and will come into effect in late August/early September, after its promulgation in the Collection of Laws. The Ministry of Finance has simultaneously been preparing a draft government decree intended to extend the deadline for reporting cross-border arrangements in accordance with extensions on the EU level. The duty to report cross-border arrangements implemented after 25 June 2018 remains unchanged.
FOREIGN NEWS IN BRIEF
- The European Commission initiated a public consultation to revise Council Directive 2003/96/EC restructuring the community framework for the taxation of energy products and electricity. This initiative aims to maximise taxation’s role in fulfilling EU climate protection objectives. Aimed to reduce concealed subsidies for fossil fuels and some sectors of economy, the draft includes a revision of tax rates and tax exemptions. The initiative is part of the new sources of funding in the EU plan of economic revival approved by the European Council on 24 July 2020. In addition to changes to energy taxes, new funds should also be generated from fees on plastic packaging, digital tax revenue, or possibly from a tax on financial transactions.
- The European Commission disclosed instructions on changes in customs regimes concerning movement of goods between the EU and the United Kingdom after 31 December 2020.
- The Slovak parliament approved a package of support for entrepreneurs, comprising the cancellation of a special banking tax, an increase in tax deductible fuel expenses (currently only 80% of the total cost of fuels is tax deductible), the introduction of higher criteria for statutory audits, and the implementation of a unified effective date for amendments to tax legislation, making them always come into effect on 1 January of the following year, unless special EU rules or other international treaties stipulate otherwise.