Business News

Photo: archive of Czech Government

In Business News: Czech Airlines gets a firm commitment for financial support from Korean Air and pushes ahead with restructuring plan, the ruling parties agree on the introduction of kurzarbeit to cushion the impact of the EU-Russia sanctions and give their approval to a finance ministry proposal to level a punitive tax on undeclared property, and, the average interest rate on mortgage loans drops to its lowest level since 2003.

Czech Airlines pushes ahead with restructuring plan

Photo: Filip Jandourek
The ailing Czech national carrier Czech Airlines this week received a firm commitment for financial support from its biggest private shareholder Korean Air to boost its efforts to stabilize the loss-making company. Czech Airlines has been downsizing its fleet and is planning to lay-off a third of its workforce, approximately 300 people including pilots, flight attendants and technicians. A one-day strike by flight attendants was narrowly averted on Friday as management promised to soften the impact of the lay-offs. Korean Air has conditioned its increased financial support for the airline on the full implementation of the mentioned restructuring plan.

Senate approves third VAT rate

Photo: Kristýna Maková
As of next year, the Czech Republic should have three VAT rates. The Senate this week approved a government draft bill on the introduction of a third - 10 percent VAT –rate on books, medicines and baby food. The third VAT rate for selected goods is intended to ease the financial burden on pensioners and families with children. The basic VAT rate of 21 percent and the reduced rate of 15 percent will be maintained. The bill still needs to be signed into law by the president.

Coalition parties approve plans for kurzarbeit

Photo: archive of Czech Government
The leaders of the ruling parties this week approved plans for the introduction of kurzarbeit in the Czech Republic and a finance ministry proposal to level a high tax on illegally acquired property. The conditions under which kurzarbeit will operate have not yet been finalized but the initial proposal is that firms hit by the EU-Russian sanctions or by a natural disaster would be eligible to ask for state support for a period of up to six months and could do so repeatedly in the event of serious problems. Kurzarbeit is an agreement between the state, companies and employees under which firms with financial problems get a contribution from the state enabling them to put workers on part-time work rather than affecting major lay-offs.

Coalition wants to enforce punitive taxes on illegally acquired property

Photo: Barbora Němcová
The ruling parties have also approved a finance ministry proposal to give the tax authorities more powers in investigating the source of undeclared property exceeding 5 million crowns. According to the proposal the tax authorities would analyse the value of private property in relation to declared income and tax returns and in cases where they suspect malpractice they would have the right to ask the owner to document the origin of the property. If the owner fails to do so the tax authorities could level a high fine on the property - ranging from 20 to 100 percent of the value of the undeclared assets. The opposition parties have slammed the proposal, but the parties of the ruling coalition are clearly determined to push it through and even lowered the proposed limit on tax inspections from the proposed 10 to 5 million crowns.

Usti attracts more foreign investors

Illustrative photo  (Public Domain)
The Usti region of north Bohemia has attracted new foreign investment, according to the CBRE consulting company which mediated the deals. The British firm Regenersis which operates an international network of repair centres for electronic products has leased 3,000 square metres near Teplice where it plans to build a high-tech repair centre and the Japanese Fukoku, the world's largest wiper blade rubber company, has plans to start production in Lovosice with outlooks for employing some 300 people once the business is up and running. Overall, the investments are expected to bring about 400 new jobs in a region where unemployment is traditionally high.

Mortgage loans cheaper

Photo: Jiří Němec,  Radio Prague International
The average interest rate on mortgage loans in the Czech Republic continued to fall in September, dropping to 2.54 percent, the lowest level since 2003 when the indicator started to be monitored, according to data collected by Fincentrum. The previous all-time low was set in August when the average rate was 2.65 percent. The index monitors the average interest rate on mortgage loans regardless of the length of the fixation term. A total of 8,302 people applied for a mortgage loan in September, 1,787 more than in August.