Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors

Finance Minister promises savings on taxes

Share on facebook
Share on twitter
Share on linkedin
Table of Contents

Finance Minister Miroslav Kalousek has launched the government’s crisis plan. He told all financial offices last week to stop collecting income tax deposits from entrepreneurs and businesses with fewer than six employees.

“The move will secure more cash for entrepreneurs, which they can use for investment at a time of financial crisis,” said Kalousek.

Under the plan, the state will “lend” several billions of crowns to some 250,000 small businesses this year. The first tax deposit the businesses will not have to pay will be one that is payable by 15 March. But they will not avoid paying taxes for 2009. Taxes will be collected all at once at the beginning of 2010.

Representatives of small businesses are therefore not eager to hear about the tax exemptions. “Some may take it as a short-term solution to survive the worst times of the crisis, but they will still need to save up money to make the payment later,” said Bedřich Danda, head of the Association of Entrepreneurs and Businesses.

Invest and avoid taxes

Kalousek said, however, that entrepreneurs and small companies can avoid paying taxes. What they need to do is take advantage of tax write-offs, which is one of the government’s anti-crisis measures, aiming to encourage businesses to invest in the Czech economy in difficult times. “Thanks to tax savings, small entrepreneurs will have money to invest in new company equipment, which they will later be able to write off more quickly. This would help them to keep their 2009 taxes lower,” said the finance minister.

The fast write-offs for entrepreneurs will include cars, computers, televisions and office aids. The bill will make it possible to write off a computer after one year, instead of the current three years, and for cars the period will move from five to two years.

The cabinet was expected to pass the fast write-offs yesterday, and the lower house is scheduled to vote on it two weeks from now. It is very likely that Kalousek’s proposal will pass, as it is supported by the opposition Social Democrats. If passed, the fast write-offs would take effect retroactively from 1 January until 30 June 2010. It will be possible for businesses to write off more quickly any items purchased in this period. The “old way” of writing off will remain an option.

Help for carmakers

Furthermore, the Social Democrats are today expected to help push through another key proposal included in the crisis package, allowing the firms to write off VAT on all cars as of April. Under the current legislation, companies can write off only lorries and utility vehicles and cars with dividers between the front and the back seat. “I believe the opportunity to write off VAT on any kind of vehicle will have a bigger impact on the car industry than the subsidised used car removal,” said Kalousek.

The government must hope in the full support of the coaltion only in March when deputies vote on the most expensive crisis proposal – discounts on social insurance contributions paid by employers. The discounts should motivate companies to hire more people. “The highest discount of CZK 700 would apply to employees with earning minimum wage. Companies will get the discount for every employee with a monthly salary below CZK 27,000, which includes 80% of all employees,” Labour Minister Petr Nečas commented on the plan, whose aim is to save 50,000 to 70,000 jobs.

But the Social Democrats oppose proposal for social insurance discounts and will vote against it.

most viewed

Subscribe Now