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Czech Republic Considering Expanding Scope Of VAT Reduced Rate

Thursday, April 12, 2018

Czech lawmakers are considering an amendment to the VAT Act put forward by the Czech Ministry of Finance to significantly expand the scope of the value-added tax reduced rate.

The amendment would reduce the tax burden on the catering sector, for some craft and professional services, and for water and sewage services, among other things.

Specifically, the bill would cut the value-added tax rate from 21 percent to 10 percent for hairdressing and cosmetic services, bicycle repairs, footwear, clothes, the repair of clothing and household appliances, and the sale of draft beer. The VAT rate that applies to the catering and soft drinks sector would be reduced also to 10 percent, from 15 percent.

Announcing the proposal, the Czech Minister for Finance, Ivan Pilny, said an earlier pilot that reduced the VAT rate on catering and soft drinks had resulted in an increase to VAT collections on account of higher compliance rates.