News in brief, May 2021
Last month’s tax and legal news in a few sentences.
3 May 2021 In brief
DOMESTIC NEWS IN BRIEF
- The president has signed the extension of the payment of extraordinary allowances for employees in quarantine or isolation, the so-called self-isolation payments. Payments will thus be provided until the end of June 2021.
- The government has extended the Antivirus programme until the end of May 2021.
- Act No. 173/2021 Coll., increasing the carer’s allowance to 80% of the daily assessment base from 1 March 2021, has been published in the Collection of Laws. Simultaneously, the scope of persons that may draw this type of allowance has been extended from 30 April 2021 to direct relatives (e.g. parents, grandparents) and collateral relatives (e.g. sisters or brothers of the child’s mother or father).
- The Personal Data Protection Office has opined on a new duty imposed by the Ministry of Health’s extraordinary measure on certain service providers (such as hairdressers). The duty involves the keeping of records of customers for the purposes of a potential epidemiologic enquiry. The office concluded that the introduction of this duty showed several deficiencies.
- The decision on the waiver of income tax on the grounds of an extraordinary event caused by the coronavirus outbreak has been published in the Ministry of Finance’s Financial Bulletin No. 20/2021. The decision concerns conditions for the waiver of income tax upon the failure to meet the requirement for the necessary period of time of operation of assets acquired for professional education purposes.
- The GFD has issued its Information on Monetary Contributions for Employees’ Meals, summarising the legislative basis for the provision of these contributions and providing answers to questions most often raised on this topic.
- In its third reading, the chamber of deputies has passed a draft amendment to the Act on State Social Aid (Print 1116), including the approval of the following motions to amend the Income Tax Act: cancellation of the tax bonus amount limit of CZK 5,025 monthly and an increase in the tax credit to CZK 22,315 a year (currently CZK 19,404) per second child, and to CZK 27,835 a year (currently CZK 24,204) per third and any other child. The new regulation shall already be applied for the 2021 taxable period. The bill is currently being discussed by the senate.
- The Ministry of Finance’s Instruction-18 on the amount and calculation of default interest after the amendment to the Tax Procedure Code, in effect from 1 January 2021, has been published in Financial Bulletin No. 19/2021. The instruction amends the amount of the default interest rate, but not the manner in which the default interest is calculated, i.e. the rate amount may change during the entire period of default depending on changes to the Czech National Bank’s repo rate.
- In 2014–2019, the financial administration carried out 2,182 inspections focusing on transfer pricing, resulting in an additionally assessed income tax of CZK 3.2 billion and an increase in the tax base of entities subject to inspection of CZK 39 billion. The results for 2020 will be added in May after their verification.
- The Ministry of Finance is planning to implement Intrastat reporting simplifications: data reporting will be simplified so as to obtain necessary information but not increase the administrative burden for entrepreneurs and customs administrations. The draft government decree is planned to enter into effect from 1 January 2022.
- In connection with the passed tax package, i.e. Act No. 609/2020 Coll. amending certain tax legislation and other laws, the Ministry of Industry and Trade as the provider of subsidy informs about the effects on eligible expenses (fixed assets / capital expenditures, operating expenses).
- The GFD draws attention to the possibility of applying for the waiver of default interest by businesses affected by the pandemic whose majority of income for the period from 1 June 2020 to 30 September 2020 was generated from one or more activities that were prohibited or curtailed from 22 October 2020 to 31 March 2021 by the government’s emergency measure. The entities concerned may be granted a waiver of default interest on value added tax or the road tax prepayment if they report to the tax authority the fulfilment of the condition of generating more than half of their income from activities that were prohibited or curtailed.
- An amendment to the Act on Public Health Insurance Premiums has been published, postponing the deadline for filing statements of health insurance payments by self-employed persons for 2020 until 2 August 2021.
FOREIGN NEWS IN BRIEF
- The EC expressed its support to the ongoing work of the Organisation for Economic Cooperation and Development (OECD) aiming to introduce a global minimum effective level of taxation to tackle excessive tax competition and to limit profit shifting opportunities globally. Once agreement is reached at the OECD, this will be transposed into EU law. If no agreement is reached at the OECD, the Commission is committed to propose its own rules to ensure a minimum level of effective taxation.
- The EC has noted that a majority of stakeholders participating in the Green Deal public consultation argued that the existing EU ETS measures are not sufficient to reduce carbon leakage and achieve the EU’s climate ambitions. The impact assessment will be finalised in spring 2021 and the results will be considered when drafting the CBAM (carbon boarder adjustment mechanism) proposal in June 2021.
- The OECD has released a report to the G20 finance ministers and central bank governors, outlining the state of play of the OECD’s international tax agenda in key areas, which include:
- coordination of tax and fiscal measures implemented by individual states as a result of the pandemic,
- digital economy taxation (BEPS 2.0 project mainly involving the international taxation of digital economy and the minimum global tax, indirect taxes on online transactions and higher transparency in the taxation of crypto-assets), and
- environment-related tax policy.
- The OECD has released the third peer review report on preventing treaty shopping. Based on the findings, a large majority of members are translating their commitments on treaty shopping into actions and are modifying their treaty network accordingly.