Tax 

Changes in the Implementation of Double Tax Treaties Applicable From 2019 Onwards

On 1 January 2019, the new Treaty for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital that the Czech Republic signed in 2016 with Turkmenistan will start to be implemented.

The principal concepts of the treaty include:

  • A time limit for forming a permanent establishment of 12 months for construction projects and 6 months for services;
  • Withholding tax on passive income of 10 % at maximum (exceptions apply to interest); and
  • Application of the credit method in respect of double taxation.

Furthermore, from the New Year onwards, the most-favoured-nation clause treatment will be applied in relation to the Treaty for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital between the Czech Republic and Chile (specifically Section 11 (7) of the Treaty which makes it possible to apply more favourable terms based on the treaty signed at a later date between Chile and Japan). As a result, from 1 January 2019 onwards, provided all the stipulated conditions are met, the rate of 10% of gross interest will be applied between the Czech Republic and the Republic of Chile for the purposes of Section 11 (2) (b) of the above stated tax treaty.

In this context, the Ministry of Finance has also updated the Summary of Valid Treaties, which is available on its website.

Implementation of Double Tax Treaties Turkmenistan Chile
Tax 

VAT Control Statement has been in operation for almost three years. Did it prove itself in practice?

When the VAT Control Statement was introduced in 2016, many feared the changes that were linked to this new tax report. The transition to the VAT Control Statement that each VAT payer must provide along with the VAT return required a re-arrangement of systems, an adjustment of the accounting policies and an adjustment of the relations with business partners. Now, almost three years later, we can say that the VAT Control Statement partially met the expectations of the professional public. “First of all, we expected an acceleration in the course of inspections because the Tax Administrator has most of the data available from the VAT Control Statement and it was fulfilled,” said Jaroslav Beneš, director of the Tax Advisory team at Deloitte. 

14. 1. 2019