Are Czech sole entrepreneurs facing "extinction"?

Под угрозой существования оказались прачечные, химчистки, ремесленники, охранные службы и фирмы, предлагающие инженерные и технические услуги

A many as a hundred thousand sole entrepreneurs are likely to close their shops within the next three years. A large number of self-employed have shut-down their business since the beginning of this year due to changes in the tax system. This development is a cause for concern for the Business Association and Economic Chamber who have called on the government to meet and find a solution.

Photo: archive of Radio Prague
The government's proclamations about support for small and medium-size enterprises stand in a stark contrast with its actions, observers say. Since the beginning of this year, more than 30 thousand self-employed have quit and sought regular employment or enlisted with labour offices. Representatives of sole entrepreneurs say the decline may be due to new tax legislation in force as of January.

According to a new law, even those self-employed people who end in the red have to pay a minimum tax equal to the tax paid by an employee earning half the average wage. Mandatory social and health insurance payments have also been raised.

The chairman of the Association of Sole Entrepreneurs, Bedrich Danda, believes that the fall in the number of self-employed has been caused by the first stage of public finance reforms pursued by the government and that the changes will have dire consequences in the future:

"The decrease is worrying but what concerns me more is that no new entrepreneurs register, young people between the ages of 20 to 25. I see this as a threat for the whole sector."

The Association, as well as the Economic Chamber and other organisations have been worried about the development. The president of the Economic Chamber Jaromir Drabek said he had already met with some government representatives and more talks were ahead to find feasible solutions.

"The most important steps include simplifying bureaucratic procedures connected with both starting and running a business. It is necessary to review all the requirements for starting a new business and applying for changes, and all the administrative procedures at the business licensing office and the Commercial Register."

The number of the self-employed in the Czech Republic - 968,000 - is relatively high in comparison with other EU member states. Only EU countries like Greece, Portugal, Italy, Spain and Ireland have a higher percentage of the self-employed in the total number of economically active people.