Tax

Czechia to introduce 7% digital tax

The Czech government plans to introduce a seven percent digital tax on large Internet companies, such as Facebook and Google.

The Ministry of Finance estimates that the new tax could bring 5 billion CZK a year to the state budget. The law should come into force by mid-2020.

"The digital tax will apply to the most important global companies and responds to the failure of the EU-level solution negotiations as well as the slow progress of the global solution in the OECD," said Finance Minister Alena Schillerová (ANO).

According to Schillerová, there is a clear consensus that the digital tax should be introduced, only its exact form and amount is being discussed. "The digital tax should affect Internet companies with a global turnover of over 750 million euro," the minister added.

ČSSD First Deputy Chairman Roman Onderka also confirmed the governmental agreement. 

Czechia´s neighbor Austria had originally intended to impose a three percent tax on the Internet giants. However, the government later revised the proposal and increased the digital tax rate to five percent. In Austria, digital taxation is to come into force by 2020. The digital tax is part of a package of measures dealing with large technology companies.

Sebastian Kurz´s government hopes that the measures will bring more than 200 million euro a year to the state budget. In Austria, the tax is to apply to companies that earn at least 750 million euros annually, of which at least 25 million euros should be earned in Austria.

In early April, the French National Assembly also approved a three percent digital tax. Here again, it is a tax for companies with a profit of 750 million euros a year, of which at least 25 are earned in France.

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