Czech finance minister ready to postpone, cut proposed digital tax

The Czech finance minister has said the government’s proposal to introduce a digital tax could be postponed till next year and the proposed tax could be cut from 7 to 5 percent. The statement comes following a warning from the US ambassador to Prague about possible retaliatory measures by the Trump administration and concerns voiced by leading Czech exporters who fear damage to Czech-American business relations.

Photo: Gerd Altmann, Pixabay / CC0

The government-proposed digital tax which the finance minister wanted to introduce in mid-2020 and which was expected to bring approximately 5 billion crowns a year into state coffers may be postponed till next year, Czech Finance Minister Alena Schillerova told journalists on Thursday. She said she would bring up the issue at Monday’s government session and open a debate on possibly lowering the proposed digital tax from 7 to 5 percent.

Under the original government proposal, which the Chamber of Deputies has already passed in its first reading, the digital tax of seven percent was to 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 US ambassador to Prague, Stephen King, recently warned Czech deputies against introducing the proposed tax .In a letter to the lower house Mr. King said the proposed 7 percent tax was discriminatory and warned that the US could effect retaliatory measures.

Czech exporters have also urged Prime Minister Andrej Babiš to reconsider the proposed tax. They said they feared damage to Czech-American business relations and possible retaliatory measures from the US administration. They pointed out in a letter to the prime minister that the volume of Czech exports to the US is about 100 billion crowns and 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.