Large technology companies, such as Google and Amazon, which offer their services across Europe but accumulate sales and tax mainly in countries with a favorable tax rate, are to pay 7 percent of their revenue to the Czech tax authorities as of this July.
This figure is much higher than the ones proposed by other European countries that are also considering imposing a tax on tech companies.
However, the planned digital tax might not be so high in Czechia in the end. Some Czech MPs fear retaliation of the United States, which threatens to impose tariffs on Czech products.
“We should not deviate from the European average which is 3 to 5 percent,” said MP Pavel Juříček.
Finance Minister Alena Schillerová, however, refuses to reduce the proposed tax.
“The 7-percent rate is the result of a political agreement within the government coalition,” Schillerová said. “This is a temporary solution until a common solution of the 36 economically most advanced OECD countries is found.”
The European states have not yet found an agreement on a common approach, which is being blocked by low-tax states such as Ireland and Luxembourg. Some countries, like the Czech Republic, have therefore come up with their own solutions.
Czech MPs will start discussing changes to the Digital Services Tax Act in the coming weeks. There is also a possibility that the state will start collecting the tax next year instead of this summer as planned.
After the introduction of the digital tax, the state budget expects revenues worth 5 billion korunas (€198,5 million) a year.