18th May 2016

Právo: Companies upset about administrative burden - survey

The Právo daily published an article with details on administrative burden for Czech businesses, using data from the ČSOB-conducted survey, the Company expectations index. Besides the paperwork companies are upset about the frequent legislative changes and the level of taxes. 

Out of 500 businesses that took part in the survey, 77% consider the extent of obligatory submission of documents/forms to be the greatest obstacle for doing business, followed by the issues of frequent legislative changes (75%) and high taxes (71% of businesses). Some businesses have to fill out as many as 2,000 forms per year, while only one-third out of them are duties that cannot be omitted, President of the Association of Small and Medium-Sized Entrepreneurs and Crafts of the Czech Republic Karel Havlíček says in the article. The Czech business environment is overregulated, he adds, and we tend to make it even more complicated. Despite the effort to reduce administrative burden for businesses, some measures introduced by the government are counterproductive. 

The electronic communication between authorities and businesses is another issue mentioned by the article. The rules for e-communication vary and authorities often do not share data among themselves. It happens that businesses have to submit identical information to a number of authorities. Spokesperson of the Economic Chamber of the Czech Republic Miroslav Diro mentions, besides the increased administrative burden in the first four months of 2016, the draft amendment to the Labor Code proposing obligation for employers to introduce measures to reduce stress at workplace.

Details from the survey:
1.    What is the biggest obstacle for doing business in the Czech Republic?
For 77% of businesses - administrative burden
75% - frequent changes of legislation
71% - high level of taxes
45% - price policy of competitors
39% - secondary insolvency
34% - lack of employees
30% - unfavorable exchange rate
21% - debts (banks, other creditors)

2.    Change of VAT rates – how big would the administrative burden be for your business?
As for the 21% VAT rate, 35% of businesses stated that the change would mean a significant administrative burden. As for the 15% VAT rate, 22% of businesses said the change would mean a significant administrative burden for their operation. As for the 10% VAT rate, 17% of businesses stated the change would be a significant administrative burden.

If they had a choice, 30% of businesses would choose basic VAT rate of 15%, and 16% of businesses would select the rate of 10%. Read details in the document attached below (in Czech).  

Click also on an article by the Czech Radio saying that Czech businesses spend 17 days per year on average with tax-duties-related paperwork. 

Also, Radio Praha informed, that the majority of Czechs feel that the state neglects support for small and medium business over large enterprises, according to the results of a poll conducted by TNS Aisa for Czech Television. Only 30 percent of respondents consider support of SMEs adequate. The main hurdles for the latter are considered a complicated tax system, excessive bureaucracy and inadequate support for starting-up a small private enterprise.


Members of the American Chamber of Commerce in the Czech Republic