Tax bill to impact budgets of public broadcasters

Czech Television, photo: Tomáš Adamec / Czech Radio

A government VAT bill will lead to Czech Television and Czech Radio losing a significant chunk of their annual budgets. However, the Ministry of Finance says the amendment will end a discrepancy between Czech law and European Union legislation.

Czech Television,  photo: Tomáš Adamec / Czech Radio
On Wednesday Andrej Babiš’s acting ANO government rubberstamped a raft of changes to the country’s taxation system.

Among them was an amendment to the law on value added tax doing away with a measure introduced last year under which public broadcasters can claim VAT back on goods and services to the same degree as commercial radio and TV stations.

Czech Television says the change to the statute books will result in a fall of between CZK 350 million and CZK 400 million in its budget. Czech Radio will be CZK 120 million worse off, according to station representatives.

The Ministry of Finance said on Wednesday that when the current legislation was passed in 2017 it had drawn attention to the fact that it was at odds with EU law. It announced at the time that the next tax bill it prepared would rectify that discrepancy.

However, the director general of Czech Television, Petr Dvořák, has come out strongly against the government’s move, accusing the Ministry of Finance of ignoring the station’s warnings and the arguments of top tax advisors.

The Czech Television chief said the amendment breached a principle agreed with the government under which it was to invest savings made on VAT into the station’s shift into DVB-T2 digital broadcasting until the year 2021.

Mr. Dvořák said that if the government did not offer some form of compensation the change would impact Czech TV’s digitalisation process. People could lose free television broadcasting overnight and the station may have to reduce its range of services, he warned.

For its part, Czech Radio said it too has been highlighting the problem for some time. Spokesperson Jiří Hošna said the station had zero intention of reducing services for listeners and would make savings from across its budget. This includes making up to 120 people redundant, a move that was announced last week.

Mr. Hošna said Czech Radio hoped there would be an opportunity for further debate on the government bill in the lower house. The station will now focus on pushing for a rise in the radio licence fee, which has stood at CZK 45 a month since 2005, he said.

Both Czech Radio and Czech Television question Ministry of Finance’s assertion that VAT deductions for public broadcasters contravene EU legal norms.