Czech Republic May Delay Digital Tax And Lower Rate

19/05/2020

The Czech Government is considering whether to delay the introduction of a proposed tax on the provision of digital services and alter its design.

Finance Minister Alena Schillerova said in a television interview on May 14, 2020, that her preference is to delay the introduction of the digital services tax until January 2021, by which time a consensus may have been reached on multilateral proposals currently being negotiated by the OECD.

Schillerova also revealed that she is favor of reducing the rate of the proposed tax to five from seven percent, which would remain higher than equivalent DSTs being introduced or proposed in other countries. However, such a move would have to be agreed by the parties in the governing coalition.

Parliament's budget committee has also voted to delay consideration of the proposals until June 2020.

As approved by the Czech Government on November 18, 2019, the seven percent DST would apply to revenues from online advertising, the sale of user data, and intermediation services, by companies with a global turnover of EUR750m (USD811m) or more and realizing sales in the Czech Republic of at least CZK100m (USD3.9m). Companies will be liable for the tax if they receive at least CZK5m from online advertising and selling user data in the Czech Republic. Similarly, the DST will only apply to revenue from intermediation services if the platform has in excess of 200,000 users.

If less than 10 percent of a company's total taxable sales are realized within Europe, it will be excluded from the scope of the DST.

As written, the draft law would be temporary and would expire at the end of the 2024 tax year.

Source: Pride Partners International