News in brief, June 2020

DOMESTIC NEWS IN BRIEF

• In its third reading, the chamber of deputies passed a draft amendment to the Labour Code, implementing job-sharing options, new concept of holidays, and introducing significant changes to delivery rules and the posting of workers. The amendment should become effective in July 2020, but some changes will only be effective from January 2021.
• An amendment to the Act on Property Valuation was published in the Collection of Laws (no. 237/2020), introducing a definition of market value that had so far been missing and ensuring compliance with the current legal order. It also clarifies procedures for the preparation of price maps of building plots of land and introduces the valuation of fast-growing woody plants.
• An amendment to the Act on Consumer Protection was published under no.  238/2020 in the Collection of Laws. Effective from 1 July 2020, it implements the EU directives that aim to strengthen the confidence of consumers through faster, more active and more thorough enforcement of adherence to consumer protection rules, enhance consumer protection legislation harmonisation, and create conditions for effective cooperation in enforcement of adherence to legal regulations among appropriate supervisory bodies.
• Notice of the Ministry of Labour and Social Affairs No. 252/2020 was published in the Collection of Laws, stipulating the amount equal to 50% of the average monthly wage in the national economy for the purpose of setting a minimum subsistence allowance, and the amounts equal to 50% and 25% of the average monthly wage in the national economy for the purpose of setting state social benefits.
• Effective from 11 May 2020, the CNB Bank Board again decreased interest rates: the two-week repo rate to 0.25% and Lombard rate to 1.00%; the discount rate remained at 0.05%, the reduced level set on 27 March 2020. A two-week repo rate of 2.00% shall be used to determine default interest for the first half of 2020.
• The GFD published information on the tax deductibility of expenses incurred for mandatory COVID-19 tests for both employers and the self-employed.
• The chamber of deputies approved a governmental draft amendment to the Act on Compensation Bonus, having rejected the senate’s amending proposal requiring a change in the financing of compensation bonuses (i.e. proposing that compensation bonuses be paid out solely from the state budget). According to the Ministry of Finance’s original proposal, as in the case of the twenty-five thousand for the self-employed persons, aid will also be paid out from the budgets of regions and municipalities, similarly as tax bonuses relating to income tax on employment pursuant to the Act on Allocation of Taxes to Public Budgets. The compensation bonus will thus also apply to limited liability companies with a maximum of two members.
• On a fast-track basis, the chamber of deputies passed an amendment to the Tax Procedure Code. The amendment should help digitalise the tax administration and change the system of sanctions and interest. It also introduces a new instrument – a waiver of the penalty for a late tax assertion, enables a partial refund of excess VAT deductions in form of an advance, and regulates filings via prescribed forms in the administration of taxes. 
• In its first reading, the chamber of deputies approved the abolition of immovable property acquisition tax and related changes to personal income tax. The second and third reading are yet to take place, during which amending proposals are likely to occur.
• The Ministry of Finance submitted to the government a proposal of tax changes effective from 2021. The tax package contains, among other things, monetary contributions for meals; the cancellation of exemption of interest income generated by non-residents from bonds issued abroad by the taxpayer with their registered office in the CR; an option for local self-governments to determine a local coefficient for individual parts of a municipality; electromobility support; gradual increase in excise duty rates applicable to tobacco products; and the introduction of a greater number of zones/ranges to determine security deposits for distributors of spirits according to the volume of distributed spirits.
• The financial administration again draws attention to the fact that the compensation bonus cannot usually be provided to those self-employed persons who are employed and as a result of such employment participate in the sickness insurance scheme. Employees performing pedagogical activities form an exception, as their participation in sickness insurance due to employment does not constitute an obstacle to being entitled to the compensation bonus.

FOREIGN NEWS IN BRIEF

• The European Commission recently updated a notice to stakeholders regarding the VAT consequences of the withdrawal of the United Kingdom from the European Union. The Withdrawal Agreement introduced a transitional period until 31 December 2020, and the notice discusses scenarios for transactions starting within the transitional period but ending after it, for transactions performed as of the end of the transitional period, and furthermore for transactions relating to Northern Ireland.

• The OECD's Forum on Tax Administration (FTA) in co-operation with the Intra-European Organisation of Tax Administrations (IOTA) and the Inter-American Centre of Tax Administrations (CIAT) outlines how tax administrations can prepare for the potentially prolonged, uncertain and complex recovery period from the COVID-19 crisis. The report highlights that significant benefit can arise from early business restoration planning to help identify the main challenges and opportunities for both tax administrations and taxpayers.