Czech Republic

New nuclear energy sources to be financed primarily by ČEZ

25 January 2015

According to the draft of National Action Plan for the development of nuclear energy in the Czech Republic that went through public comment procedure in  the period of 16th January – 23rd January 2015 there are three variant solutions of further development of nuclear energy in the Czech Republic. First one is that the construction of new reactors would be financed solely by the ČEZ or its subsidiary. This solution is marked as the most preferred one although even the Minister of Industry and Commerce Jan Mládek doesn’t believe that this solution would be viable. Second possibility is that the new reactors would be constructed by a consortium of companies with the majority share owned by the Czech state through ČEZ subsidiary. Third option that the reactors would be constructed directly by the Czech Republic. This option is even in the Action Plan marked as the least probable because of the excessive financial impact on the state budget and it is included only for the sake of complete scale of possibilities. Nonetheless the Action Plan stresses that is imperative that the construction of new blocs in Dukovany and in Temelín started as soon as possible with building permit being granted as soon as 2025. The Action Plan also faces criticism as the public comment procedure lasted only few days. The use of nuclear energy and construction of new reactors especially in Temelín also faces long-term criticism from the Austrian and Czech environmental movements and organisations who threaten to take another action against it.

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Project of tax payment by card on internet postponed

22 January 2015

Due to the excessive cost of payment of income tax on internet by card the Financial Administration abandoned for now its intent to introduce this way of payment originally scheduled to start at the beginning of the year 2015. The Financial Administration was unfortunately able to negotiate beneficial terms only with MasterCard leaving the fees for paying with Visa in the amount of several percent of the tax paid and diminishing the tax collected as a result. This possibility was meant as a tool to make the tax collection easier. The Financial Administration is now working on different means of making the tax payment more convenient. Regarding payment of income tax also other measures of prevention of tax evasion are nearing completion as Income Evidence Act that is to affect around 600 000 companies and entrepreneurs is now in ministerial comment procedure and according the schedule it is to come into force by the 1st January 2016.

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Czech and Slovak ministers discussed cooperation in the efficient use of EU funds

19 January 2015

Czech Minister of Regional Development Karla Šlechtová met on Friday 16th January with her Slovak counterpart Deputy Prime Minister for Investment Ľubomír Vážny. The topic of their discussion was the cooperation in the efficient use of EU structural funds and specific steps that would be taken in pursuit of broadest utilization of EU funds possible. Eventually both ministers agreed that some steps would be developed further and later presented to the remaining members of Visegrad Four Group (V4) and used as common ground in discussions with the European Commission. The Czech Republic is also about to supersede Slovakia in V4 presidency in the period between 1st July 2015 and 30th June 2016.

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Unclear interpretation of Czech Cybersecurity Act

19 January 2015

Some private-owned companies complain that the interpretation of Czech Cybersecurity Act and of related regulations and ordinances is unclear and that they are not sure if it applies to them as the implementation would be very costly especially for the small ones. This act is designed mainly for the central authorities, ministries and other parts of public administration including regional authorities but the crucial areas such as energy, water, food and transport are also covered by the Act. Also banks and insurance companies should verify whether they fall under the jurisdiction of the Cybersecurity Act. This Act came into force on 1st January 2015 and affected entities should act on its basis from 1st January 2016. The implementation timetable is according to the experts already very tight and implementation itself would cost the affected authorities significant amount of money not to mention the fact that they would often need the assistance of experts to implement it.

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Wifi: To pay or not to pay for…

16 January 2015

On Friday 16th January the journal MF DNES published article related to the alleged plan of the Ministry of Industry and Commerce to introduce the payment for the commercial use of non-licensed radio bands where WiFi networks operate, i.e. for WiFi ISPs. This was to be a newly introduced part of Radio Spectrum Management Strategy that was added to the draft after it was already discussed with other ministries and with Czech Telecommunication Office without objections. Štěpán Beneš representing one of the WiFi ISPs Grape SC said that the payments would mean the elimination of some companies as it would mean the raise of end-user prices and the loss of competitiveness compared to alternative means of providing internet connectivity. Minister Jan Mládek in reaction to this MF DNES article denied such rumors and assured the general public that during his mandate he would allow not allow any of those absurd charges. The Ministry spokesperson added that the material is still in the preparatory phase.

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CzechTourism to be more pro-trade

15 January 2015

Newly appointed Director of CzechTourism agency Monika Palatková presents her vision of further development and functioning of the agency. Her primary goal is to transform the CzechTourism to more pro trade oriented. According to her words the agency should transform itself into renowned marketing agency securing competitiveness and constant growth of value of “the Czech Republic” brand in both the domestic and foreign markets. The marketing concept should be based on focus on regional development, allocation of funds based on the effectivity criteria and partner marketing along with the use of modern ICT. The main goals for the 2015 are the creation of network of partners bringing both economic and non-economic benefits, measurability and monitoring of organizational activities in while keeping the use of economic funds in mind, change of the perception of the Czech Republic brand and increasing the loyalty of visitors to this brand along with the change of perception of tourism by the residents of the Czech Republic towards the image of important economic branch with the stress on regional development.

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European Commision not to provide additional money to Czech Republic

14 January 2015

On Monday 12th January the European Commision confirmed that it would not include the Czech Operational Programs into the first batch of evaluated and approved programs. This decision based on a letter from European Commissioner for Employment, Social Affairs and Inclusion Marianne Thyssen is meant as a reaction on unsatisfactory fulfillment of Framework Agreement made with the Czech Republic. The precise cause of the problems is the unsatisfactory state of Civil Service Act implementation namely the absence of precise timetable of adoption of ordinances and government executives regulating remuneration of civil servants and setting up transparent selection process of new civil servants and their superiors. The representatives of responsible ministries already took part in negotiation with the EU officials on Friday 9th January but these remarks remained unresolved. Also the Czech Prime Minister Bohuslav Sobotka during his discussions with the President of European Commission Jean Claude Juncker in December 2014 promised that the Czech Republic will solve this situation as fast as possible. Further negotiations with the EC to this subject is scheduled for February.

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Mládek announces compromise proposal: lignite mining limits to be breached, villages are to remain

13 January 2015

According to the latest variant solutions presented by the Minister of Industry and Commerce Jan Mládek the limits imposed on the mining of the lignite in 1991 will be most probably breached. Minister Jan Mládek presented this week two solutions that both include breach of the lignite mining limits and continuation of mining either in Bílina mine or in both Bílina mine and ČSA surface mine. In contradiction to mining companies requests to abandon the limits completely Minister Mládek decided that the villages affected by the vicinity of mines and by the mining works (Černice and Dolní Jiřetín) are going to remain virtually unaffected. The final decision and adoption of one of the two proposed solutions still depends on the outcomes of Jan Mládek’s negotiations with municipality and regional officials, with representatives of mining companies that are to take place in months to come and on the decision of the Government as a whole.

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Czech inflation and CZK exchange rate

09 January 2015

According to the data available for the December 2014 the inflation of prices in 2014 fell to only 0.4 % to 1.4 % in year-on-year comparison. Also the consumer price growth was at its lowest point since 2003 and second lowest altogether. This present big challenge for the Czech National Bank as the inflation is deep below its 2% inflationary goal and even threatens to slip into unhealthy deflation. Although the CNB already reacted by weakening the Czech currency below the rate of 27 EUR/CZK in autumn of 2013 and in spite of the fact that the Czech currency is at present weakening to the level of 28 EUR/CZK and it still seems not enough. According to the analysts, for example David Marek from Deloitte, the Czech National Bankl has basically two or three possible options how to deal with the situation. First one is to weaken the currency even more and irritate both domestic population and foreign states and companies even more. Second one is to move the interest rates to negative digits that would require the Government and the Czech Parliament to change the legal framework. And eventually the third one is to extend its exchange rate commitment until the end of 2016. The Board of CNB also refused the possibility of ending the regime of intervention earlier doubting the effectiveness and helpfulness of such move.

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The support of renewable resources will exceed 1 trillion CZK by the year 2030

06 January 2015

According to the estimates of Supreme Audit Office of the Czech Republic the total costs of renewable resources will exceed 1 trillion CZK by the year 2030 that is comparable to annual income of the Budget of the Czech Republic. In the area of renewable resources the state supports electric energy production from biomass, wind, water, solar energy and from biogas. According to available data only in the period of 2011-2014 the costs were nearly 157 bn CZK. Most expansive of these renewable resources was the solar energy where the total support amounted up to 66 % of total 44 bn CZK while the energy from these power plants made only 22 % of all renewable resources thus being the most expansive one. What’s more, these costs could be even higher as the Ministry of Industry and Transportation doesn’t track the amount of tax relief provided to the solar plant owners. The support of solar power plant was also the object of investigation of the European Commission as it was stated that the conditions for the domestic solar power plant owners according to the act that came into force in 2013 presented their advantage in relation to foreign producers and European Commission stated in its regulation that also importers from EU must be eligible for the support. This compensation is expected to amount to 2.5 bn CZK solely for the year 2014.

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