The Czech tax system is one of the world’s most complicated

The tax system in the Czech Republic has been rated #85 out of 100 countries in the 2019 Global MNC Tax Complexity Project

Jason Pirodsky

Written by Jason Pirodsky Published on 20.05.2019 10:07:18 (updated on 20.05.2019) Reading time: 2 minutes

Did you know the tax system in the Czech Republic is more complicated than that of Ecuador or Nigeria?

That’s the state of Czech taxes according to the Global MNC Tax Complexity Project, which has measured the complexity of tax systems in 100 countries around the world.

The Czech Republic comes in at #85 on that list, trailing countries like Mexico, Russia, and neighboring Slovakia.

Each country’s tax system is assessed in two main areas, Tax Code Complexity and Tax Framework Complexity; individual measurements in the two areas include criteria like the clarity of Depreciation, Dividends, and Interest, and the complexity of tax system Guidance, Filing, Audits and Appeals.

Countries were assessed an overall rating based on the individual criteria, with the Czech Republic coming in at 0.43. Slovakia (0.42) and Poland (0.41) edged out their neighbor in tax system transparency, with Germany (0.37) and Austria (0.34) rating significantly higher.

The Czech Republic fared best in the ‘Additional Taxes’ rating, or the “taxes that are levied on MNCs’ taxable income in addition to corporate income taxes (commonly referred to as “local” or industry-specific taxes),” coming in at #14 out of the 100 countries in the study.

Alternative Minimum Tax, CFC-Rules, and Group Treatment were the only other categories in which the Czech Republic rated among the top 25 countries.

In most other categories, the Czech Republic ranked among the lower third. For the Enactment criteria, which rates the process of how a tax proposal is adopted into law, the Czech Republic came in at #97 out of 100.

The country scored the same in Investment Incentives, or measures that encourage investment through research & development.

Overall, the Czech tax system was rated among the world’s top 15% most complicated. In the EU, only Greece (#86), Italy (#88), and Croatia (#92) topped the Czech Republic in tax system complexity.

Jersey led all countries in tax system transparency, followed by Nicaragua and Mauritius. Estonia ranked highest in the EU, followed by Luxembourg and Lithuania. The UK ranked #43, and the USA #57.

At the other end of the spectrum, the tax system in Brazil was found to be the world’s most complicated, followed by Colombia and Egypt.

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