VAT climbs higher
Written by: René Jakl
Photo by: Věroslav Sixt
Starting in 2004 the value-added
tax rates on selected goods and services will be changed. In most
cases changed means raised. Finance ministry estimates indicate
that next year the average citizen will pay CZK 1,100 more in VAT
than this year.
Most strongly felt will be the jump from 5% to 22% assessed on
telecommunications services. Besides calls placed from fixed and
mobile lines, this also includes data transmissions, mainly internet
connections. So we'll have to pay extra for admission to the information
age that is so heavily promoted by the government. This change
won't affect most firms that pay VAT. They might sense it in decreased
demand for their more expensive goods. This relates to already-mentioned
telecommunications, from which the finance ministry expects to
receive more than 50% of the total amount of increased taxes, as
well as other areas. The most frequently used goods and services
include auto rentals, used cars, hair dressers, tax consultancy,
accounting and legal services, commercial rents, road transport,
security services, and real estate services.
There is a large group of products that the government supports
but is also imposing higher rates on - ecological products. Prices
will rise for biodiesel, biogas, water turbines, heat pumps, solar
water heating equipment and photovoltaic cells, small waste-water
treatment plants, wind turbines, parts for producing energy-saving
light bulbs, electrical cars, catalytic converters, heated wood
in the form of sawdust, brickettes and pellets, water-soluble paints
and lacquers, and recycled paper.
During the approval of the amended VAT law, many deputies argued
that the European Union forces us to raise taxes. That's not true.
The EU requires only that the reduced and basic VAT rates, 5% and
22%, gradually come into line with one another. Groceries are the
most important category to remain at the lower rate. Chocolate,
coffee, and ice cream will be moved into this category, which means
that their prices will go down. Additionally, starting on 1 January
2004, the limit for mandatory registration to pay VAT will be reduced
from three to two million crowns. Unless the senate votes the amendment
down, which is theoretically possible, the next time you phone
new year's congratulations will cost you about 16% more.
We welcome feedback for matters of legal
advice which are particularly interesting for you. Please submit
suggestions to The Prague Tribune (Legal Labyrinths Column), Na
Maninách 7, 170 00 Praha 7, or to firstname.lastname@example.org.