News in brief, July 2021

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

DOMESTIC NEWS IN BRIEF

  • On 28 June 2021, the government extended the duration of Regime A of the Antivirus programme concerning employers whose employees are ordered into quarantine or isolation due to COVID-19 until the end of October 2021.
  • Effective from 24 June 2021, the CNB Bank Board increased interest rates, in particular the two-week repo rate used by the financial administration to calculate default interest, to 0.50%. The existing rate of 0.25% was in effect from 11 May 2020 to 23 June 2021. The two-week repo rate of 0.25% is to be used to calculate default interest for the first half of 2021 and the second half of 2020, and the current repo rate of 0.50% shall apply for the second half of 2021.
  • In connection with the declaration of a state of emergency in the Břeclav and Hodonín regions, the Ministry of Finance has prepared a tax relief package. The general tax pardon published in the ministry’s official Financial Bulletin covers the following:
    • postponement of personal and corporate income tax due date from the end of June until the end of August 
    • postponement of deadlines for filing tax returns and VAT ledger statements and paying VAT for May, June and the second quarter of 2021 until 25 August 2021 
    • waiver of penalties for VAT ledger statements filed from 25 June 2021 to 31 July 2021 
    • waiver of road tax prepayments payable on 15 July
    • waiver of income tax arising on the provision of subsidies and loans from the State Fund to Support the Redevelopment of Tornado-Destroyed Housings.
  • GFD Instruction D – 50, determining the format and the structure of data messages, was published in Financial Bulletin No. 24/2021.
  • The financial and customs administrations have published their Report on Activities for 2020, containing information about the collection of taxes, the Ministry of Finance’s legislative activities, and inspection activities.
  • The Senate has referred back to the Chamber of Deputies a draft amendment to the Act on State Social Aid (Print 1 116), also including an amendment to the Act on Income Tax cancelling the tax bonus amount limit of CZK 5,025 a month and increasing tax credit per second, third and any subsequent children. The Senate proposes changing the annual tax credit amounts to be dividable by twelve (from CZK 22,315 to CZK 22,320 and from CZK 27,835 to CZK 27,840) while also amending the amendment’s effectiveness. Deputies may either pass their version or the version proposed by the Senate, or they may decide not to approve it at all. The amendment is planned to be debated at the deputies’ session in July.

 

FOREIGN NEWS IN BRIEF

  • The OECD has published comments emanating from public consultations on the proposed changes to the Commentaries in the OECD Model Tax Convention with respect to Article 9 regulating the tax treatment of transactions between related parties. The most discussed change is the inability to apply the mutual agreement procedure (under which a mutual agreement on taxation between contracting states is applied) where tax on a transaction between related parties is additionally assessed based exclusively on national legislation (e.g. non-deductible expense) and not on challenging the arm’s length principle upon which the price between related parties was determined.  
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