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Fifty Shades of Tax Dodging • 51
The Czech Republic was criticised in May 2014 by the
European Commission for delays in providing information
about companies that may have preferential tax deals. 350
In a letter from 9 June 2015, the Czech Minister of Finance
informed the Chair of the European Parliament’s special
committee on tax rulings (TAXE) that “all necessary steps
[to share information about the tax ruling practice of the
Czech Republic with the European Commission]… should be
finalised in upcoming days.” 351 Nevertheless, according to
the Ministry of Finance letter the “number of acts similar to
rulings issued in the Czech Republic is rather insignificant
and their nature fully corresponds to general standards.” 352
In the letter the Czech Minister of Finance states that, “the
Commission’s legislative proposal of 18 March 2015, which
aims at improvement of the tax rulings’ transparency, was
strongly welcomed…” 353
Special Purpose Entities (SPEs)
According to the OECD, SPEs are not significant in the Czech
Republic. 354 Despite this overall assessment, a conference
held in June 2015 entitled “Slovakia and Czech Republic as
Tax Planning and Asset Protection Alternative for Ukrainian
Businesses” focused on the use of “special purpose vehicles
for international tax planning and asset protection.” 355
Patent box
The Czech Republic does not have a patent box. 356 However,
there are various research and development (R&D) tax
incentives that seem to be quite generous. According
to a Deloitte survey, the Czech Republic offers a super
deduction for costs incurred for qualified research activities.
Deduction for the costs incurred during the implementation
of R&D projects could be up to 200 per cent and tax relief of
corporate income for investments in technological centres
and strategic service centres could be up to ten years. 357
Tax treaties
Regarding tax treaties with developing countries, according
to information from the Ministry of Finance one new tax
treaty with Colombia came into force 358 and one older one
with Kazakhstan was updated (the new protocol has not yet
been ratified). 359 Another tax treaty with Ghana is in process.
According to available information, the bilateral tax treaty
has already been approved by the Czech government. 360 No
detailed information about the treaty itself or when it is going
to be approved by the Czech Parliament could be found. A
revised treaty with Luxembourg took effect from January
2015, replacing a treaty from 1991. The new treaty includes
lower withholding tax on several income categories, including
a zero per cent rate on dividends under certain conditions. 361
In general, the Czech Republic uses a combination of the
UN and OECD models in its treaties. Before 1989 treaties
with some countries (i.e. China, Nigeria and Tunisia) were
negotiated using the UN model. Since joining the OECD, the
Czech Republic uses its own template based on the OECD
model. 362
Financial and corporate transparency
Public reporting for multinational corporations
The Czech Republic implemented into Czech legislation the
exact wording of the Article 89 of the Capital requirements
directive (CRD IV), which includes country by country
reporting for banks with public access to these reports. 363
Whether the Czech government would be willing to support
extending this reporting public requirement to other sectors
remains unknown.
Ownership transparency
At an EU Council meeting in January where the anti-money
laundering directive was approved, the Czech government
issued a statement that welcomed the deal. However, it
also criticised the directive for including a ten-year limit
for keeping records for criminal proceedings in relation to
money laundering, which it considered to be too short and
stated its preference for a minimum threshold instead of a
limit. 364 The implementation of the directive is set to begin
this year. According to information provided by the Ministry
of Finance, an amendment to the current legislation will be
submitted to the government by the end of October 2015. 365
The amendment would include two options for a register
of beneficial owners. The first version with a register
that is not accessible to the public, and a second version
would propose partly public access (part of which would
be publicly accessible, including the following information:
name, date of birth, country of residence and nationality of
beneficial owner). 366 A final decision about which version
will be implemented will be made by the government during
the fall. The Ministry assumes the new law to be effective
from 1 July 2016. 367