“In 2018, no changes are made to any significant tax rates; however, the changes in the tax system are rather numerous. For example, the first child tax allowance has increased, lower flat expense charge-off rates have started to apply to entrepreneurs and the conditions for obtaining a tax bonus have been tightened,” explains David Marek, Deloitte’s Chief Economist. “The increase in the minimum salary has affected the amount of the ‘nursery fee’ and, as such, the effective taxation of individuals,” adds David Marek.
In addition to the above stated changes, this year’s tax collection will be also affected by the Local Sales/Purchases Report (‘kontrolní hlášení’) introduced earlier and the electronic sales records being gradually rolled out. “Although the rates are not rising, the more effective and efficient tax collection is increasing the total amount collected and, as a result, also the tax burden indicators, such as Tax Freedom Day,” says David Marek.
Taxes in Practice: Increased Administrative Work, Tighter Audits and Frequent Changes to Legislation
“In the long term, tax payers and remitters have been feeling the effects of the increase in tax-related administrative work. In a series of cases, tax authorities focus on the analytical review of the data provided. While previously they focused on individual items, lately they have been assessing the overall economic and tax situation of the tax payers based on a more detailed analysis of the data in the tax return and the report. This inevitably places greater demands in terms of the correct systems setup and the accuracy of the data provided,” notes Radka Mašková, a Director at Deloitte’s tax function.
“Although the Czech tax system is generally the same as in other EU countries, a certain level of tax uncertainty still persists among tax payers. This is due to frequent changes in tax legislation and new, at times unclear, interpretations of the existing tax legislation,” adds Radka Mašková.
Tax Freedom Day
Tax Freedom Day is a simple and easily comprehensible demonstration of the tax burden in the economy. The method used for calculating the date of Tax Freedom Day divides the year into two parts, in a ratio corresponding to the proportion of total amount of collected taxes to net national income.
The number of days for which tax payers in the selected countries of the EU need to work in order to pay taxes to the government and the date of Tax Freedom Day
29th March 2018
18th May 2018
24th September 2018
21st September 2018