News in brief, December 2020

Last month’s tax and legal news in a few sentences.

DOMESTIC NEWS IN BRIEF

  • From 1 January 2021, the amount of interest on building savings and mortgage loans used to finance housing and provided by a bank or a building society that may be deducted from the personal income tax base will be reduced. The tax administration has published methodological information on this. In view of some uncertainties of the new legislation, the issue is to be discussed at the Coordination Committee of the Chamber of Tax Advisors and the General Financial Directorate in the nearest future.
  • From January, the minimum wage will increase by CZK 600, i.e. from CZK 14,600 to CZK 15,200. The lowest guaranteed wage will range from CZK 15,200 to CZK 30,400 per month, or from CZK 90.50 to CZK 181.00 per hour in 2021.
  • Decrees regulating printed/electronic forms for filings regarding VAT, road tax, and property tax, customs documents and gambling have been published in the Collection of Laws.
  • Deputies have passed a draft amendment to the Excise Duty Act aiming to mitigate the effects the COVID-19 pandemic has had on breweries. The amendment introduces the possibility to return beer that could not be distributed and consumed due to government measures restricting the operation of hospitality facilities back to tax warehouses for disposal or reprocessing, with the right to claim a tax refund. 
  • The Ministry of Industry and Trade has prepared an amendment to the Regulation on the Implementation of Certain Provisions of the Investment Incentives Act. Its aim is to support investments by private investors, and at the same time to localise the production of selected commodities of strategic importance for the protection of citizens’ life and health in emergency situations in the Czech Republic, and to encourage production by existing domestic producers to the reduce the Czech Republic's dependence on foreign suppliers.
  • The Ministry of Finance has prepared an annual decree setting the amount of per diem allowances when travelling abroad.  Based on the proposal of the Ministry of Foreign Affairs, it has proposed an upwards adjustment of the basic rates of foreign per diem allowances for 21 items.
  • The Senate has discussed a governmental proposal to introduce a lump-sum tax for the self-employed/sole traders. The limit for applying this scheme is an annual income from the business activity of up to CZK one million. The senators also added to the bill a technical modification concerning the budgetary allocation of taxes. The deputies will decide on the lump-sum tax at the beginning of December.

 

FOREIGN NEWS IN BRIEF

  • At a summit hosted by Saudi Arabia, the European Union and others, the G20 leaders agreed to endeavour to find a consensus-based solution for a globally fair, sustainable and modern international tax system by mid-2021. It is to be built on the OECD‘s ongoing work on new approaches to the taxation of the digital economy.
  • A council directive laying down the rules on special VAT identification numbers for businesses in Northern Ireland was published in the Official Journal of the European Union. After the transition period given in the withdrawal agreement between the EU and the United Kingdom concludes at the end of 2020, EU VAT regulations will continue to apply in Northern Ireland so as to avoid a hard border between Ireland and Northern Ireland.
  • The OECD published its mutual agreement procedure statistics for 2019.  Compared to the prior year, the number of new cases continues to increase, which also confirms the trend that is likely to continue with the changing rules of international taxation. Most cases involved transfer pricing.
  • On 6 October 2020, the Economic and Financial Affairs Council of the EU (ECOFIN) adopted a revised EU Blacklist, a list of non-cooperative jurisdictions for tax purposes. Two new jurisdictions, Anguilla and Barbados, have been added to the list, while, at the same time, the Cayman Islands and Oman were removed. Following this latest revision, the EU Blacklist includes the following twelve jurisdictions: American Samoa, Anguilla, Barbados, Fiji, Guam, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, the US Virgin Islands, and Vanuatu.

 

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