Position on Digital Taxation

The Confederation of Industry of the Czech Republic does not support a short-term solution for Digital Service Tax. From our point of view, there are many threats, such as double taxation, that will have an impact on both European and Czech business. It can also negatively influence the process of decision making for entrepreneurs.

We are not sure if taxation is a good way to stimulate and help the European digital business sector. If some European entrepreneurs overstep proposed thresholds, the EU will reward him with higher taxation.

We have a problem with the definition of the term “digital economy”. In the close future, European and Czech enterprises will have an increasing amount of digital content. For example, industrial products will be more closely connected with digital services and this tax will be a barrier for economic development. We suppose that all of the economy will be digital in the next years or decades, and there is no real promise that we will have some new and long-term rules for the modern economy before then. This new tax will remain in the old tax system.

We want to discuss this topic more in a long-term view. We would like help to find consensus amongst OECD countries. We suggest that a solution applicable only in EU is not optimal because it can cause countermeasures in other parts of the world and this is not favourable for the EU economy. Of course, we are against any efforts to tax it separately at a national level – digital technologies comprise a global sector and we want to find a global solution.

We can support discussion about motivations for voluntary permanent establishment or other solutions. Some companies have already made a decision about permanent establishment because it is helpful from the point of view of corporate social responsibility. We are prepared to discuss it within the framework of future potential agreements on Common Consolidated Corporate Tax Base.

Contact persons:

Economic Affairs Department of the Confederation of Industry of the Czech Republic:

• Bohuslav Čížek, director (This email address is being protected from spambots. You need JavaScript enabled to view it.)
• Vladimír Štípek, economist - analyst (This email address is being protected from spambots. You need JavaScript enabled to view it.)