Government likely to support EC’s Anti Tax Avoidance Package

The Czech Republic appears it will support new European Commission rules on the taxation of large multinational corporations (under the EC’s Anti Tax Avoidance Package), writes financial daily Hospodářské noviny. The package is conceived to promote greater tax transparency and, the EC writes, to “create a level playing field for all businesses in the EU”.

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According to Hospodářské noviny, the Czech government could approve the measures next Monday, March 13. Under the rules, firms would have to pay taxes in the country where profits were achieved, blocking them from moving ownership of profitable assets to countries with lower tax rates. By estimates, the EU rules could mean a boost in tax revenues for the Czech Republic as high as an additional six billion crowns annually. But, Hospodářské noviny points out, the Finance Ministry, last December, was against, quoting Finance Minister Andrej Babiš as saying that corporate tax fell under the competency of individual member states.

The finance minister is no stranger to tightening regulations on a national level, successfully putting in motion the new EET (cash registers system) to clamp down on the grey economy and tax avoidance in various sectors. But the EC’s corporate tax package is not entirely to his liking, Hospodářské noviny suggests. According to the daily, the Finance Ministry pointed to problematic elements in the proposal and elements which were unclear; the ministry did allow that the proposal, as is, would limit tax evasion especially on the part of multinationals operating in the EU, the daily added.

The government led by Prime Minister Bohuslav Sobotka, in the meantime, asked the Finance Ministry to put together a detailed analysis. For the moment, it appears the government will back the EC package in principal, but will seek and push for some details to be ironed out. The proposal will have to be approved by all EU members, a process expected to take at least several months.

There are around 1,000 firms in the Czech Republic with global revenues of more than 20 billion crowns (740 million euros) in the Czech Republic, Czech Radio reported, including companies like Škoda Auto (part of the Volkswagen Group) or the finance minister’s own food and chemical giant, Agrofert.