15th March 2016

Czech Rep largely compliant with OECD tax transparency standard, improvements needed | Czechs do not like tax evasion by corporations, see inequality in possibility to circumvent, determine (tax) rules - study

OECD data show the Czech Republic is „largely compliant“ with the international standard for exchange of information on request and transparency objectives of the Global Forum on Transparency and Exchange of Information for Tax Purposes. Improvements should be made in the areas of availability of information on ownership, access to information/access powers, and exchange of information/rights and safeguards, for example. View details.

According to a survey conducted by the Median agency for the Glopolis think-tank, almost 60% of Czech respondents think that it is big corporations who is responsible for the greatest part of tax evasion in the Czech Republic; 58% of respondents maintain it is multinationals who is responsible, 48% think it is Czech corporations. Deputy director of the Glopolis institute Ondřej Kopečný says that the state should focus more on tax evasion by the big corporations, which is a view in line with the opinion of Miroslav Kala, Director of the government NKÚ Audit Office. Mr. Kala says that shadow economy constitues 7% of the total tax gap in VAT collection, “which is not negligible, but not fatal”. Half of the tax gap is made by businessmen who deliberately manipulate their accounting. This is a criminal act, often involving auditors. 

On the one hand, tax evasion by big corporations is seen as a common (and intolerable) practice by 89% of respondents. On the other hand, respondents use this practice to explain the “right” to perform tax evasion by individuals. The survey shows that people feel there is a new kind of inequality based not only on income differences, but also on unequal opportunity, possibility to circumvent or directly determine the rules. This affects individual attitude to paying taxes and leads to increased losses from the state budget, Glopolis says in an article published by the Hlidacipes.org server. Read more (in Czech).

Also, Radio Praha writes Czech tax authorities are reported to be taking a lot keener interest in the tax declarations and relations of major multinationals with local earnings. At the moment, its reported that the biggest team of investigators has been established in Brno and tasked to look into the tax declarations and operations of some of the biggest earning companies. Links with foreign tax offices are being used to grapple with the complicated and sophisticated tax structures used by some multinationals to cover their tracks. The Brno model, it’s reported, should be rolled out to other regions fairly soon and the number of checks from individual tax offices is expected to take off as a result. Special software is also being used to highlight the companies whose books look like being the most suspicious. Read more (in English).

According to data by the Czech Statistical Office and Eurostat, the Czech Republic is the economy with the biggest money outflow in the EU, the e15.cz server wrote

According to the recently publish data, the Czech Republic's basic rate of value added tax (VAT) of 21 percent ranks among average VAT rates in the European Union. The Czech Republic's lowered VAT rate of 15 percent is the second highest in the EU. The second lowered VAT rate of 10 percent is also one of the higher ones, the Czech News Agency wrote (in English).  Read a commentary by the roklen24.cz server.

More data by the European Commission on VAT rates in EU28. 

Members of the American Chamber of Commerce in the Czech Republic