Petr Dubinsky

Government Bets On Google And Facebook To Increase Tax Revenues

Alena Schillerova

The Czech government aims to obtain much more revenue in taxation from the likes of Google and Facebook, Hospodářské noviny reported on Thursday. Under a planned new digital tax scheme, the huge multinationals would be forced to pay taxes in the place they make earnings, in this case the Czech Republic, the business daily said.

The cabinet is hoping the move could lead to increased revenues of around CZK 3 billion annually and the minister of finance, ANO appointee Alena Schillerová, is expected to draft a digital tax bill within a month.


The majority of the additional revenues envisaged would be generated from the taxation of online advertising.


ANO Prime Minster Andrej Babiš has not in the past supported such legislation, though it has been advocated by junior coalition partners the Social Democrats, as well as the Communists, who support the minority government in key votes. Hospodářské noviny said.


Ms. Schillerová told the daily that the key factors would be the parameters establishing the companies concerned, the range of services involved and the tax rate. While there is now consensus on the idea of a digital tax, there is still disagreement over the rate, Hospodářské noviny reported. ANO are for a rate of 3 to 5 percent but the left-wing parties want it to be higher.


The Ministry of Finance is currently analysing the situation in other European countries that have brought in a digital tax or are planning to do so.


The Social Democrats and the Communists are pushing for the Czech Republic to follow the Austrian model. Under the system approved in the neighbouring state, 5 percent of the amount generated from online ads by Google, Facebook and Amazon must go to the state coffers.


France rubberstamped a digital tax this month that should bring in 3 percent of the earnings of companies such as Google that have global turnover of EUR 750 million or more or turnover in Europe of CZK 50 million or more.


Google in the Czech Republic paid over CZK 8 million in taxes in 2017, chiefly for the provision of consulting services. By contrast, the major domestic internet company Seznam pays around CZK 250 million in taxes annually, Hospodářské noviny says.


A spokesperson for Google in this country, Alžběta Houzarová, told the daily that it observed all the relevant tax legislation. She said that like many multinationals the firm pays the majority of its taxes in the state where it is based, in this case the United States.


An MP from the opposition Civic Democrats, Jan Skopeček, told Hospodářské noviny that enthusiasm for the plan was premature as while some states have approved such a move it has not yet been tried out in practice.


Mr. Skopeček also suggested that if the Czech government does push through the idea, internet giants may find other ways of avoiding paying taxes.