Czech income tax to be reduced at the start of 2021

Zeman objects to the cut but returned it unsigned, enabling it to take effect.

ČTK

Written by ČTK Published on 29.12.2020 17:27 (updated on 22.01.2021) Time to read: 2 minutes

Raymond Johnston

Written by Raymond Johnston Published on 29.12.2020 17:27 (updated on 22.01.2021) Time to read: 2 minutes

President Miloš Zeman returned the recently passed tax package to the lower house head Radek Vondráček unsigned on Monday, in accordance with his previous decision to neither veto nor sign the bill and thus enable it to take effect, Zeman's spokesman Jiří Ovčáček told the Czech New Agency (ČTK).

Vondráček's spokeswoman Barbora Štenglová confirmed it.

One of its main provisions is the reduction of the individual income tax through the abolition of super-gross wage. The 15-percent tax will be newly derived from the gross wage. Another tax rate, 23 percent, will apply to those with the highest monthly income over CZK 141,000.

Simultaneously, the basic income tax credit per taxpayer will be increased.

The tax package will come into force on Jan. 1 as it will be promulgated in the Law Digest on Dec. 31, Vondráček (ANO) confirmed to ČTK.

The Interior Ministry has already received an order for the law promulgation from the Chamber of Deputies, ministry spokesman Ondřej Krátoška said.

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For the law to come into force as of Jan. 1, it has to appear in the Law Digest by the end of the year. Before, it has to be signed by Prime Minister Andrej Babiš (ANO).

The Chamber of Deputies and Senate, the lower and upper houses of Czech Parliament, passed the legislation in December.

Zeman wrote to Vondráček that he had decided not to add his signature. He dislikes it that the projected tax change might “deepen the unfavorable development of public finances, mainly the state budget,” he wrote.

The controversial tax package, which Babis’s ANO pushed through together with some opposition parties earlier this month and that is opposed by the junior government Social Democrats (ČSSD), will deprive the state budget of about CZK 88 billion next year.

“In the situation the state is faced with, I view the given changes in the income tax, which reduce the taxation not only on one but even on two levels, as a display of a reduced portion of responsibility,” Zeman wrote in his letter to Vondráček.

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