The Chamber of Deputies approved the Amendment to the Public Procurement Act at its session on November 4. Among the most significant improvements are the obligation to disclose contracts, real costs/final prices, and all documents and information related to the tendering process (excl. given exemptions), for example. The tendering agency will be obliged to justify each procurement and the scope of procurements that have to be processed according to the Public Procurement Act will be extended. The amendment also introduces rules related to ownership structure of tender winners and subcontractors. The bill will be now debated in the Senate and, if approved, it should take effect on Apríl 1, 2011ě. Click here for details.
At the Chamber session on November 9, MPs greenlighted the so-called JIM/the Single Collection Point and amendments to related laws, including the Income Tax Act, Acts on Health, Sickness and Pension Insurance, for example. The stated intent of the tax reform is to increase effectiveness of public finance and increase the state budget revenues by 1. reducing direct taxation (taxation of labor) and increasing indirect taxation (VAT and excise tax); i.e. use VAT tax revenues to finance the planned pension reform, and 2. making the Czech tax system more transparent and user-friendly (this means cutting the number of tax exemptions, for example). The bill abolishes the dividend tax and the 15% personal income tax calculated from the so-called 'supergross' earnings (i.e. gross earnings plus social and health insurance contributions), for example. The personal income tax would be calculated from the gross wage, using the tax rate of 19%. Other measures proposed are related to VAT registration (obligatory for entities generating annual turnover of CZK 750,000), or meal vouchers benefits (would be replaced with a single tax deduction worth CZK 3,000 per year). The bill will be debated in the Senate. Click here for details.
The Chamber of Deputies approved the Amedment to the VAT Act at its session starting on November 6 after the Upper Chamber, the Senate, rejected the bill on November 3. The amendment increases VAT tax rate - the lower rate from 10% to 14% as of January 1, 2012 - and a unification of VAT rates at 17,5% as of January 1, 2013. Click here for details. The opposition parties turned to the Constitutional Court and further changes in VAT tax rates could appear in 2012.
The Chamber of Deputies approved at its session on November 6 a set of new acts that constitue a pension reform, the Act on Pension Insurance, the Act on Supplementary Pension Insurance, and amendments to related acts. The acts were rejected by the Upper Chamber, the Senate, in October. The reform introduces a 3-pillar system: the 1st pillar, the pay-as-you-go system financed by contributions and state budget revenues (6,5% of employees salary); the 2nd pillar, compulsory pension insurance based on individual capitalized savings (3% of gross salary channeled from the first pillar +additional 2%), and the 3rd pillar, voluntary supplementary insurance.
At its session on October 19, the Government approved a draft amendment to the Act on Investment Incentives written by the Ministry of Industry and Trade. The draft proposal includes changes in the current system of incentives for the manufacturing sector and introduces incentives in the areas of technology centers and centers of strategic services. Investors could be granted income tax / corporate tax breaks for ten years instead of the current five. The bil will be debated in the Chamber’s Economic Committee. Click here for details.
The draft Act on Criminal Liability of Corporations (click here, amendments to related acts here) was approved both by the Chamber of Deputies and the Senate in October, but was vetoed by the President and returned to the Chamber of Deputies on November 18. The bill includes a list of around 80 violations of law corporations can be sanctioned for, however, the list does not include economic criminal activity such as ‘tunneling’, breaches of law in the area of public procurement, horizontal cartel agreements, cross-border trade with military material and state-controlled technologies. There is also no provision on Leniency Program.
The issue of Concurrence of Employment and Statutory Body Membership is dealt with within the Amendment to the Commercial Code. The Chamber of Deputies approved the bil at its session on November 9. Members of Boards of Directors or Supervisory Boards, besides having a mandate contract, could be officially allowed to have also an employment contract. The Ministry of Justice has proposed an amendment to the Commercial Code that would explicitly allow for the duality. For detials click here. Amendments to respective acts were also proposed by the Ministry of Labor and Social Affairs to make employees and statutory body members equal in terms of contributing to the pension and sickness insurance systems. The amendment to the Act on Sicness Insurance was also debated and approved on November 9. The bil will be discussed in the Senate. Click here for details.
The brand new Civil Code draft was approved by the Chamber of Deputies on November 9. The aim of the new Civil Code is to unify a rather fragmented civil law (new law will replace current Civil Code, part of the Commercial Code, part of the Labor Code) and make it more user-friendly. Major changes are expected in legal terminology; new legal instruments will be introduced; the freedom of contract is stressed. The adoption of a new Civil Code means new amendments to a wide range of acts, including Labor Code or tax acts. The bill will be debated in the Senate. Click here for details.
MPs will discuss a brand new Act on Corporations at the Chamber session starting on December 6. The new Act on Corporations should replace the current regulation of companies / corporations under the Czech Commercial Code and better define the process of their establishment and operations. No major changes of regulation are expected, although there are exceptions: corporate governance (including liability / responsibility of statutory bodies), regulation of holdings and capital companies (limited liability companies and joint stock companies). The Chamber’s Committee for Constitution will debate the bill on December 1. Click here for details.
At its session on November 4, 2011, the Chamber of Deputies passed the Amendment to the Labor Code. MPs greenlighted the bill beginning of September, but the Senate, the Upper Chamber of the Parlament, rejected the draft amendment at its session on October 7 and returned the bill to the Chamber of Deputies. The changes proposed in the Labor Code mirror negative practical experience of users with the 2007 amended Code. The bill increases to a certain degree the flexibility of the Czech labor market and reduces administrative burden (by re-introducing institutes such as temporary secondment, allowing courts (in specific cases) to decide about the compensation for an employee for an invalid termination of employment).Tthe bill newly introduces 6-month trial period for top managers, the amount of severance pay would correlate with the duration of employment, hours worked overtime would be included in the contracted salary. The President signed the bill on November 16. For more click here.
The Chamber of Deputies approved a draft Amendment to the Act on Employment that, among other, introduces sanctions for illegal employment and an explicit ban on exercise of dependent work by the self-employed (on a civil/commercial contract). Click here for details.
The Chamber of Deputies greenlighted the Amendment to the Act on Health Care Insurance after the draft amendment was rejected by the Senate in September. The stated intent of the amendment is to reduce costs of pharmaceuticals by adjusting reimbursement and pricing policy. The Ministry of Health claimed this was necessary because pharmaceutical costs in the Czech Republic are higher than elsewhere in Europe. The amendment was signed bz the President and published in the Collection of Laws. Click here for more.