Position on the Czech Digital Tax Proposal

The Confederation of Industry of the Czech Republic has sent to the Czech government its opinion on the digital tax proposal.

The Confederation has been participating in discussions about digital tax on a European level from the very beginning. We have tried to provide some constructive criticism.

The Confederation perceives certain imbalances in the current tax systems. Nevertheless, we emphasize that the Confederation primarily supports a long-term, international or global solution.

We are calling for further discussion due to some possible threats and unanswered questions. The government already received our comments and we are prepared for the subsequent official comment procedure. This procedure may take next few months.

First, it is necessary to solve the question of the threat of double taxation. Our advice is to prepare a relevant analysis which will help avoid incompatibility with double taxation treaties.

We warn against unintended and unpredicted impacts. We don’t understand some parameters of the Czech proposal – for example, why the Czech government chose the highest tax rate (7%) and widest scope of taxation among others European countries (which are considering impose this tax). Other countries in the EU are thinking about a 3-5% rate and limited scope e.g. only taxation of digital advertisement. On the other hand, The Czech proposal contains not only 7% rate, but wider tax scope as well, specifically digital advertisement, digital services connected with selling user data and using digital platforms.

We insist on clarification of the definitions of the tax proposal, mainly in terms of digital platforms (multisided digital interfaces), which are unclear and could bring uncertainty into the economy.

The government must declare that companies under the threshold of this tax will not be affected by any additional administrative and bureaucratic requirements.

We advise to coordinate changes of the tax system due to the development of digital technologies on OECD level and exploit OECD proposals (just now under preparation) with a coordinated approach (our view on discussion on OECD level here).

Our detailed comments to this tax law proposal (in Czech) are available here.

In case of any question or comments you can contact us.

Contact:
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.)