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May 18, 2021
2021-1009

Czech Republic moves forward with Digital Services Tax

Plans to introduce a Digital Services Tax (DST) in the Czech Republic are back on the agenda after a long pause.1 On 12 May 2021, the Bill covering the new tax passed its second reading in the Chamber of Deputies, bringing it one step closer to coming into effect.

The Czech digital tax bill has experienced challenges in development since its inception and the basic parameters of the new tax are still not clear. For example, members of Parliament are debating what tax rate should apply and discussing a rate ranging from 2% to 7%. The current consensus appears to be that a 5% rate should apply, but the adoption of a variety of different rates for different types of services cannot be ruled out completely at this stage.

It is also not clear when the new tax will enter into force (if passed). The start date was originally expected in mid-2020, then at the beginning of 2021 and now there is discussion of a possible entry into force date of 1 July 2021. However, there is also discussion of 1 January 2022 as the possible entry into force date.

Future Alerts will monitor the development of this initiative, including the final legislation.

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For additional information with respect to this Alert, please contact the following:

EY Czech Republic, Prague

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ENDNOTE

  1. For background, see EY Global Tax Alert, Czech Government proceeds with legislation on Digital Services Tax, dated 20 October 2020.
 

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