Survival of the Richest

Czech Republic
“Unfair tax practices in corporate taxes are
certainly unacceptable, but those related
to VAT have to be discussed with the same
intensity as direct taxes.”
Andrej Babiš
Minister of Finance 282
Overview
In 2016, the Czech government continued to prioritise
domestic improvements of indirect tax collection (mostly
value added tax (VAT)) over corporate tax collection.
The Ministry of Finance does not consider international
tax avoidance a key issue for the Czech Republic or the
international community, and thus they do not see any need
to support more ambitious proposals regarding corporate
tax transparency than those contained within OECD BEPS.
For example, during negotiations on the EU Anti-Tax
Avoidance Directive in June 2016, the Czech Finance Minister
Andrej Babiš threatened to veto the final compromise
proposal unless the EU gave the Czech Republic an
exemption from European VAT rules to implement stronger
measures to combat fraud. 283
General reflection on the broader impacts of tax dodging,
especially in relation to developing countries, is very scarce
in government documents. A promise to “push for greater
transparency in the ownership structures and financial
reports” appeared in a draft of the Strategic framework
for Sustainable Development - Agenda 2030. 284 No other
more concrete plans about how the Czech Republic wants
to support mobilisation of domestic resources developing
countries could be found.
Transparency
Public country by country reporting
Like most other EU Member States, and in line with the
legal requirements of the EU, the Czech Republic has
introduced public country by country reporting for the
financial industry. 285 The government is currently working on
implementation of non-public country by country reporting
for multinational corporations with a turnover of a minimum
of €750 million. 286
Regarding full public country by country reporting for all
sectors, the government does not have an official position.
Comments by the Ministry of Finance indicate that the
Czech government is not in favour of public reporting
requirements. The ministry argues that the exchange
of information between tax authorities is sufficient.
Furthermore, the ministry highlights that public reporting
could increase the administrative burden for corporations
and that “excessive transparency” can negatively affect
their competitiveness. Lastly, the ministry believes that
due to incomplete understanding of data, the public could
misinterpret the data if it is published by corporations. 287
It is therefore very unlikely that the current government will
promote full public country by country reporting on activities
in all countries where multinational corporations do business.
Ownership transparency
After lengthy discussions, a new law was adopted which
establishes a register of beneficial owners as part of the
transposition of the EU’s 4th Anti-Money Laundering Directive
into national law. The register will include information on
companies as well as trusts, but public access will be very
limited, if possible at all. The law only guarantees access to
“obliged entities” (such as the finance intelligence unit, police or
courts). If any public access is granted, it will be given to those
who are able to demonstrate a legitimate interest. 288 However,
the definition of “legitimate interest” is very narrow. The law
includes concrete areas in which a person or organisation
will need to prove its legitimate interest to access the
information in the register. 289 Civil society organisations have
raised concerns that this definition of access is very narrow
and in practice could lead to exclusion of public access. 290
Some experts doubt that the Czech access requirement is
wide enough to be in line with the directive. 291 Czech civil
society organisations, in collaboration with a member of the
parliament, prepared an amendment which would guarantee
access at least to persons with legitimate interest. 292 However,
in the end, the amendment was rejected. 293
After approval of the national register with very limited
access for the public, Czech civil society organisations
focused on the European Commission’s proposal of full
public access to the beneficial ownership registers 294 under
the ongoing revision of the EU's 4th Anti-Money Laundering
Directive. 295 Initially, the Czech government disagreed with
the Commission's proposal. However, according to sources
close to the government, as well as from Brussels networks,
it seems that during November 2016 the government has
changed its position and now supports the EC's proposal.
The change of position could be partly attributed to pressure
from civil society organisations, as well as to increased
media attention on the issue of ownership transparency. 296
58 • Survival of the Richest