- From 1 October 2003, the turnover threshold for obligatory VAT registration was reduced from
CZK 3 mil. to CZK 2 mil. a year and from 1 May 2004 further to CZK 1 mil. a year;. - The VAT law will contain provisions regulating intracommunitary trade between EU Member
States. - From 1 May the standard VAT rate was reduced by 3 percentage points (from 22 % to 19 %). The
reduced rate remains unchanged and it covers only a narrowly defined list of socially sensitive
commodities (food, drugs, construction works for housing, heat etc.)
Excises
- The excise duties on commodities where Czech rates were lower have been raised above the level
of the minimum rates applied in the EU. From January 1, 2004 excise duty on mineral oils was
raised. The tax burden on the most frequently sold type of cigarettes will be gradually increased to
reach 57 % or at least 60 € per 1000 cigarettes by January 1, 2007; - A rise in the excise duty on spirits and tobacco products will be accompanied by measures aimed
at the prevention of tax evasion (stamping of spirits, restrictions on stand selling); - A new regulation on excise duties, which will introduce changes concerning duty suspension
arrangements through so-called tax warehouses, has been accepted.
Income taxes
- The amended Income Tax Act introduces a common system of taxation for parent companies and
subsidiaries from different Member States and a common system of taxation applicable to
mergers, transfers of assets and exchanges of shares concerning companies from different
Member States; - The corporate income tax rate was reduced to 28 % from 1 January 2004 and will be further
reduced to 26 % as of 1 January 2005, and finally to 24 % as of 1 January 2006; - Faster depreciation of items listed in the first three amortisation groups (e.g. computers, selected
means of transport, machinery). - Increased R&D allowance amounting to up to 10 % of the tax basis.
- Self-employed persons have to pay at least a minimum amount of tax corresponding to a notional
income at the level of 50 % of the average wage. - Joint taxation of married couples became effective, serving as a tool to support families with
children and replacing child allowance by tax credit, including tax bonus.
Social contributions
A gradual rise in the assessment base of the self-employed between 2004 and 2006 from the current 35
% to 40, 45 and eventually 50 % of the difference between revenues and costs, whereby this difference
may not fall below 50 % of the average wage;
A budgetary neutral rearrangement of social contributions - a decrease in the contribution for the active
employment policy compensated for by a 2 p. p. increase in pension contributions.
Real estate transfer tax
The real estate transfer tax was cut by 2 p.p. (from 5 % to 3 %) as of 1 January 2004, and the tax is
payable within the deadline for filing one's tax return.