Govt Approves 7% Digital TaxMatt Atlas
The introduction of a 7 percent digital tax for large online businesses such as Facebook and Google has been approved by the government today.
According to estimates of the Ministry of Finance, the tax could bring five billion crowns a year to the state budget. The law is expected to come into effect next year.
The tax base will be based on revenues for services related to Czech users, which will be provided during the given tax period. This will be the calendar year. The tax will be paid in monthly advances and will be payable within the deadline for filing the tax return.
Internet companies with a global turnover of over € 750 million (CZK 19.1 billion), with turnover in the Czech Republic of over CZK 100 million, are subject to tax. This will affect major global players such as Google, Facebook, Amazon, and Apple.
At the same time, the government approved another criterion according to which digital companies will not be subject. The decisive factor will be the proportion of revenue from taxable services in total revenues in Europe. Companies with a maximum of ten percent will be excluded from the law.
“Based on comments from the professional community, we have decided to exclude from the bill those companies where the provision of taxable services is only a fraction of their overall activity. Schillerová. At the same time, these companies will be obliged to notify.
The Ministry of Finance proposes to introduce the so-called DST model of digital tax proposed earlier by the European Commission, but the EU has not succeeded. Taxes selected internet services. These include the placement of targeted advertising on websites, paid social services, or the sale of user data. Some digital economy platforms will also be taxable, allowing users to provide services and goods with each other for a fee.
The proposal lays down minimum taxation thresholds for individual taxable services. In the case of a targeted advertising campaign and the provision of user data, these are charges for the Czech Republic of at least five million crowns. If using a multilateral digital interface, the interface must have more than 200,000 user accounts.
The Chamber of Tax Advisers considers the proposal problematic due to the Czech Republic’s international obligations regarding double taxation of foreign companies. It also has reservations of one month between when the law becomes effective and when it becomes effective.
The proposed tax will apply to revenues from services provided during the tax period, but only the part related to Czech users. The tax period should be a calendar year, and the tax should be paid in monthly advances.