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Czech News in English » News » Babiš proposes that one-crown bonds be taxed

Babiš proposes that one-crown bonds be taxed

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Prague, Feb 20 (CTK) – Czech Finance Minister Andrej Babis (ANO) submitted a proposal that one-crown bonds that owners bought from their firms be taxed to the Chamber of Deputies yesterday, he told reporters during the government meeting.
The measure will apply to dozens of people only, since it will not concern state bonds, he added.
It will also afflict Deputy PM and billionaire businessman Babis who bought one-crown bonds of his Agrofert concern for 1.482 billion crowns in 2013.
Prime Minister Bohuslav Sobotka (Social Democrats, CSSD) said after the government meeting yesterday that he considered it important that the amendment only afflict the people who had bought bonds of their own firms.
“I have considered it impossible since the beginning that we tax state bonds holders, for instance,” he said.
Sobotka also said the Tax Authority must express its clear opinion about the practice of buying one-crown bonds of own firms, which Babis did. “These bonds have not been taxed for several years. The Tax Authority must clearly say whether this was tax evasion,” he pointed out.
Babis said last week that he would propose that the profits from the one-crown bonds, issued when they had not been subject to tax, be taxed as of next year. The interest proceeds from the bonds would be taxed as of the date of the respective legislation’s effect.
Babis proposes now that this provision be included in an amendment to the law increasing tax reliefs mainly for blood donors, submitted by the opposition TOP 09 and Mayors deputies.
Babis faces a legal complaint on suspicion of tax evasion and breach of trust in connection with the bonds.
Sobotka as well as other politicians from the government and opposition parties criticised Babis’s transaction with the Agrofert bonds.
Sobotka called on Babis last week in a letter to say whether the Financial Authority had dealt with the bonds issue.
Babis denies having violated law by the purchase of the Agrofert bonds. He said he might answer Sobotka’s letter yesterday.
Babis bought ten-year bonds with a 6-percent interest that Agrofert issued in December 2012.
“My former firm [Agrofert] had a credit of 22 billion crowns and it was preparing the largest bakery in Europe for nine billion, a giant ammonia-producing plant in Slovakia for another nine billion and last year, it invested 19 billion. So its credit amounts to 37 billion now. It naturally knew it would have high investments and this is why it wanted ‘long money’ that banks would not provide,” Babis said, explaining the purpose of the bonds.
Babis recently transferred his Agrofert and SynBiol companies to trust funds due to the amendment to the conflict of interest law, dubbed Lex Babis as it would primarily affect his business. It bans business companies, in which ministers own a 40 percent stake at least, from access to public procurement, discretionary subsidies and incentives and bans government members from operating media.
Under the proposed change, individuals who bought one-crown bonds issued by the firms that are financially related to them would be subject to taxation, Babis said.
Deputies could debate the amendment to which Babis wants to add his proposal in late February, he added.
The untaxed one-crown bonds ended with a legislative change in 2013.
Babis will gain tax benefits of 52 million crowns from the bonds by the end of this year. He said he would send this sum to charity.
Moreover, Babis is suspected of not having had enough money to buy the bonds.
Babis showed a bank receipt to CTK yesterday proving that he had purchased the bonds with the nominal value of 1.48 billion crowns for 1.55 billion.
In reaction to it, Sobotka said this was just one of the answers to his questions. “The main problem is whether tax evasion was committed by issuing the Agrofert bonds,” Sobotka said.
($1=25.372 crowns)

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