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Czechia Will Stop Compensating for High Energy Prices

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Compensation provided by the state to citizens to alleviate the impact of high energy prices and the reimbursement given to companies due to price limitations will conclude by the year’s end. Zbyněk Stanjura, the Finance Minister from the ODS party, communicated to the press that an extension of this measure is unlikely given the evolving trends in energy prices within the market. He noted that in the upcoming year, deliberations will take place concerning the continuation of the windfall tax, also known as the tax on extraordinary profits, which has been linked to energy price dynamics.

Stanjura remarked that wholesale energy prices, following the disturbance caused by the Russian invasion of Ukraine last year, were gradually reverting to normalcy, a transformation that was gradually filtering down to consumer costs. Based on this progression, he asserted that the need for compensatory measures in the following year would be superfluous. However, he also anticipated that price ceilings might persist until the year’s end, as certain households could potentially face a surge in electricity and gas costs if their providers had not yet presented prices beneath the prescribed limit.

In conjunction with the cessation of compensation initiatives, Stanjura is also preparing to facilitate discourse on whether the government will perpetuate the application of the windfall tax in the subsequent year. This tax, pertinent to specific entities in the energy, petrochemical, and banking sectors, would be in effect for the tax period spanning 2023 to 2025, as mandated by legislation.

“I anticipate a thorough discussion regarding whether the windfall tax will be retained beyond the tax year 2023,” Stanjura remarked. “We have stipulated that the additional revenue is designated to offset supplementary expenditures. If such mitigating factors aren’t considered, the tax would not be applicable,” he appended.

The precise sum of windfall tax revenue remains uncertain at this juncture; corporations are slated to remit advance payments for the initial three quarters in September. During the previous year, when devising the state budget for the present year, the finance ministry initially projected an aggregate windfall tax income of CZK 85 billion. However, this estimation was subsequently revised to CZK 28 billion in April, owing to the fluctuating trajectory of energy prices.



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