11th November 2012

Chamber of Deputies: increased taxes and pension reform

At its session on 7 November, the Chamber of Deputies has passed amendments to the Act on Taxation. The amendments aim at reducing of the budget deficit. The Chamber passed the governmental version of the Bill. Doing so, the Chamber of Deputies also passed the vote a confidence to the government. The Bill primarily increases both VAT rates, from 14 and 20 per cent to 15 and 21 per cent respectively. In fact, the Bill also divides the VAT rate from a unified value of 17.5 per cent that was proposed by the previous governmental Bill. Further, the Bill introduces changes to income taxes in high income range (over 100 thousand CZK per month); the income tax is increased over 7 per cent (to 27 per cent) for the period of two years (the government has already announced an intention to collect the so-called solidarity income tax only for one year).
The Bill is heading to the Senate. The opposition parties have already announced they would not hinder the passing of the Bill in the Senate. Changes to be adopted according to the Act should come into force on 1 January, 2013.

The Chamber of Deputies also passed the Act on Pension Insurance introducing the system of optional savings in private financial funds. The Act was rejected by the President of the Czech Republic. Passing the Bill in the Chamber of Deputies, the Bill should come into force in 2013. However, the future of pension insurance reform is at stake as private companies, which should be involved in the optional saving, have expressed their serious doubts about the project of the reform.

For further information regarding the previous session of the Chamber of Deputies, click here.

On 6 November, the Chamber of Deputies also passed the governmental proposal of the Bill on Joint Stock Companies Transparency (zákon o zvýšení transparentnosti akciových společností). The Bill stipulates the duty of joint companies to publish only physical stocks in registered form. The aim of the Bill is to clarify the ownership structure of joint stock companies. The Bill is heading to the Committee on Constitution.
For further information regarding the Bill, click here (source: explanatory report).

Members of the American Chamber of Commerce in the Czech Republic