Czech exporters ask PM to reconsider digital tax bill

Czech exporters have asked Prime Minister Andrej Babiš to reconsider the government’s proposal to introduce a digital tax. They fear damage to Czech-American business relations and possible retaliatory measures from the US administration.

Photo: kropekk_pl, Pixabay / CC0

Following a debate in the Czech Chamber of Commerce with forty leading exporters, the prime minister reportedly said he would consider amending the bill that the Chamber of Deputies recently passed in its first reading.

The proposed digital tax of seven percent would apply to Internet companies in the Czech Republic with a global turnover of over 750 million euros (about 19 billion crowns), and domestic sales of at least 100 million crowns per year for taxable services. It would hit companies such as Google, Facebook, Amazon and Apple.

The tax, which should come into effect later this year, is expected to bring about five billion crowns a year to state coffers.

According to the Chamber of Commerce the move could backfire "It is necessary to realize that the volume of Czech exports to the US is about 100 billion crowns. If entrepreneurs were unable to find an alternative outlet for their production, their losses could lead to a fall in tax revenue of the state budget several times higher than the projected revenue from digital services" President of the Chamber of Commerce Vladimír Dlouhý said in a statement for the CTK news agency.

According to the daily Hospodářské noviny, the US last week issued a warning that it would introduce retaliatory measures against the Czech Republic over the digital tax. Finance Minister Alena Schillerová responded by saying she had received no such warning. According to Schillerová the tax is being approved for a limited period of time -four years - and the Czech Republic is ready to immediately repeal the law if a global solution is found.