News in Brief, September 2022
Last month’s tax and legal news in a few sentences.
5 September 2022 In brief
- The Minister of Industry and Trade has announced that the government plans to compensate ﬁrms in the manufacturing industry for high energy prices. Compensation may amount to up to 70% of eligible costs. The government is expected to discuss the proposal during September. Compensation would be given to companies that can prove operational losses caused by high energy prices. Compensation should equal up to 30% of eligible costs for companies with normal energy consumption, up to 50% for companies with energy-intensive operations, and as much as 70% for particularly energy-intensive operations. The maximum aid amount should be EUR 2 million (i.e., about CZK 49.1 million). Its introduction is made possible by the European Commission's Temporary Crisis Framework.
- The government has approved its first 'anti-bureaucratic package', non-legislative material containing a proposal dealing with twenty obligations or restrictions that complicate business. In the tax and accounting area, the main objectives are to enable the use of foreign currency (euro) for financial reporting, to allow corporate income tax returns to be filed in foreign currency, to allow payment in a foreign currency, and to reduce tax depreciation methods. Involved ministers are to report to the government by 31 December on how they have implemented the proposed measures.
- Instruction No. GFD-D-56 on the waiver of penalties for the failure to report exempt income pursuant to Section 38v of Act No. 586/1992 Coll., on Income Tax, as amended, has been published in Financial Bulletin 11/2022. This obligation applies to income exempt from personal income tax if exceeding CZK 5,000,000 per individual income.
- A list of contracting states applying the common reporting standard along with a list of relevant dates for the purposes of fulfilling the information obligation under Section 13s(1) of Act No. 164/2013 Coll., on International Cooperation in Tax Administration and on Amendments to Other Related Acts, as amended ("List of Contracting States") has been published in Financial Bulletin 12/2022.
- Decree No. 237/2022, on the change of the rate of basic compensation for the use of road motor vehicles and meal allowances and on the determination of the average price of fuel for the purpose of providing travel allowances, as amended, contains an extraordinary update of the average price of 98 octane petrol (an increase from CZK 40.50 to CZK 51.40). The decree also increases travel allowances to CZK 120 if the business trip lasts between 5 and 12 hours, CZK 181 if the business trip lasts more than 12 hours but less than 18 hours, and CZK 284 if the business trip lasts more than 18 hours. The changes took effect on 20 August 2022.
- In connection with the above decree, the GFD has issued its 'Information on the increase of the limit for exemption of the monetary meal allowance from income tax on employment'. A new limit of CZK 99.40 (previously CZK 82.60) for the monetary meal allowance per shift under the Labour Code that qualifies as tax-exempt income has been in effect from 20 August.
- The Ministry of Industry and Trade has completed the comment procedure on an amendment to the Investment Incentives Act aimed at removing the mandatory government decision on all incentives. Only decision-making on strategic investments is to remain. The amendment has yet to go through the entire legislative process.
- The previous issue of Tax and Legal Update informed readers about the new rules for the taxation of low-emission company cars in effect from July. In this respect, the GFD has issued its 'Information on the identification of low-emission vehicles for the purposes of Section 6(6) of Act No. 586/1992 Coll., on Income Tax, as amended'. Battery electric vehicles (BEVs), fuel cell vehicles (i.e., hydrogen vehicles), plug-in hybrids, and electric vehicles with extended range (E-REVs) shall meet the CO2 emission limit of 50 g/km and 80% of the emission limits for air pollutants in real operation until the end of 2025.
- At the request of the Chamber of Tax Advisors, the Czech Social Security Administration commented on the issue of providing low-emission vehicles to employees for business and private purposes. It confirmed the same conclusions as Czech health insurance company VZP: the reduced value of the non-monetary benefit can be applied in the assessment base for the calculation of social security contributions no earlier than from the date of the law's entry into force, i.e., from 1 July.
- The combined nomenclature update based on Commission Regulation EU 2021/1832, which took place on 1 January 2022, modifies certain codes of the combined customs nomenclature with an impact on the application of the reverse charge mechanism. A new government decree (No. 228/2022) reflecting the changes made in the tariff schedule has been in effect from 10 August. The GFD has subsequently issued its 'Information on the procedure of taxable entities when supplying goods with a modified nomenclature code in the period from 1 January to 9 August 2022, i.e., from the date the EC regulation came into force until the date the new government decree entered into effect. The GFD allows the application of the reverse charge mechanism where both the supplier and the recipient acted in concert.
- Those interested in building a photovoltaic plant or digitising a business using support from the National Recovery Plan still have time to file an application. In response to the current energy situation, the Ministry of Industry and Trade has decided to extend the deadline for the receipt of applications under the Photovoltaic Systems with/without Accumulation call until 30 November 2022. An additional CZK 2 billion will be allocated for the acquisition of photovoltaic power plants and battery systems. The original maximum time limit for submitting the required annexes to the application for support has also been extended, from 180 days to 270 days. Applications for support under the Digital Enterprise and Virtual Enterprise calls can be submitted until the end of October.
- The OECD has received public comments on a detailed progress report on determining Amount A (the amount to be reallocated to market countries) under Pillar 1. The interim report includes model legislative rules and a list of issues to be resolved by the October 2022 OECD Inclusive Framework meeting. For more information, click here.
- The OECD Global Forum has published eight new transparency and exchange of information on request (EOIR) reports for the Cook Islands, Ecuador, Finland, Pakistan, Poland, Portugal, St. Martin, and Sweden.