News in brief, October 2021

​DOMESTIC NEWS IN BRIEF

• The Ministry of Finance has prepared changes to tax filings made via prescribed forms regarding:
  • income tax (e.g. inclusion of a long-term investment account and a tax credit for discontinued enforcement proceedings, extension of the table for claiming tax losses, update of instructions, examples and calculations, and introduction of a new attachment entitled Request to File Financial Statements in the Collection of Deeds as a result of an amendment to the Accounting Act)
  • real estate tax
  • road tax
  • customs authority competencies.
• A government decree on the general assessment base amount for 2020, the recalculation coefficient for adjusting the general assessment base for 2020, the reduction limits for determining the calculation base for 2022 and the basic amount of pension for 2022, and on increasing pensions in 2022 has been published in the Collection of Laws.
• An amendment to the VAT Act relating to e-commerce has been published in the Collection of Laws under No. 355/2021 Coll., in effect from 1 October 2021. Changes mainly concern sellers of goods effecting cross-border sales of goods to end consumers (e.g. e-shops), digital platforms or importers of goods from third countries.
• An amendment to the Act on Banks, which among others includes an amendment to the Act on Income Tax relating to the exemption of interest income from Eurobonds flowing to non-residents, has been published in the Collection of Laws under No. 353/2021 Coll.
• The CNB Banking Board has increased the two-week repo rate by 75 basis points to 1.50% while also increasing the Lombard rate to 2.50% and the discount rate to 0.50%. The new interest rates are effective from 1 October 2021. 
• The representatives of the General Financial Directorate and the Slovak financial administration have signed a contract on joint procedures upon the exchange of information, continuing the established trend of the Czech financial administration strengthening its relations with the financial administrations of neighbouring countries.

FOREIGN NEWS IN BRIEF

• The Council of the EU has approved the draft wording of the directive on public country-by-country reporting. Reports of income tax payments by individual companies will have to be disclosed by corporate groups with a controlling company established inside or outside the EU with a consolidated turnover exceeding EUR 750 million. First reports will likely have to be submitted for the taxable period started on 1 January 2025.
• The European Commission has called on the Czech Republic to clarify the implementation of the rules on hybrid mismatches (ATAD 2). Hybrid mismatches may result in the non-taxation of income or the double deduction of expenses due to the difference in the legal qualification in two jurisdictions. If any issues are not sufficiently clarified, proceedings leading to the fulfilment of the implementation duty will continue. 
• Proposals for the Polish tax reform (the Polish Deal) include a proposition to introduce a minimum tax for large businesses that report tax losses or a profitability ratio below or equal to 1%. The tax rate would be 10% of the taxable base, which would be the sum of 4% of the value of revenues increased by selected items derived e.g. from interest or services for the benefit of related entities.
• A regular meeting of the EU member states’ finance ministers has taken place in Luxembourg. The main point of discussion was a change to the regulation of insurance undertakings.