Act on digital tax goes to the Chamber of Deputies

Advent time did not bring the desired peace in the field of taxation. Among others, we are still waiting for the final form of the new so-called digital tax. And it is precisely in this sphere that the tax professionals have received a present from the Government in the form of an amendment to the final wording of the bill based on the initiative of the Chamber of Tax Advisors during the comment procedure.

According to the Chamber, the greatest problem of the original proposal was the possible impact on Czech tax residents, respectively Czech permanent establishments of tax non-residents who properly pay tax and digital services represent only minor activity for them, but would be affected by all obligations, including the necessary adjustment of information systems. In the end, the digital tax would represent a sector tax for them.

Although another solution as the one that proposed by the Chamber was eventually chosen, the desired effect was achieved.

So how was the problem finally solved? With a set of three amendments, namely:

• introduction of a new threshold whereby only those groups of enterprises will be affected by the digital tax whose digital revenues generated in EU Member States account for more than 10% of their total revenues;
• increase of the second threshold which concerns the digital presence rate in the Czech Republic, from CZK 50 million and CZK 100 million; and
• limiting the applicability of the law so that the last tax year in question is 2024, which should confirm that this is solely a temporary measure.

In this modified form, the Government submitted the law to the Chamber of Deputies for approval. However, we must not forget that there may still be changes done by the Chamber of Deputies. Now, we must wait patiently for the final wording of the law. We will keep you updated on further developments in this area.