The Czech president signed the government’s amendment to the Act on Investment Incentives, and the enacted legislation was published in the Collection of Laws on 22 August 2019. Among other changes, investment incentives for the manufacturing industry will be limited and the grant of incentives will be subject to governmental approval.
The amendment takes effect on 6 September 2019. Incentive applications submitted before the new rules become effective will remain to subject to the former requirements.
The amendment to the Act on Investment Incentives is expected to limit investment incentives for other than “supported regions” with higher unemployment. Support will be directed primarily to projects with higher added value (projects with the condition of a higher ratio of employees with higher salaries and university education, by cooperation with universities and research organisations, or investments in research and development projects). In most cases, it is likely that it will be difficult for production projects to meet these conditions, which means that projects located in supported regions will be more likely to receive investment incentives. In these regions, however, it will be necessary to prove the economic benefits and solutions to structural unemployment in the region.
An important new aspect of the system of awarding investment incentives is the condition of the government’s approval of all the applications with respect to the benefit brought to the region by the investment. A positive change concerns the cancellation of the condition of creating job openings for investments in manufacturing, and the halving of the limits of general conditions for small and medium-sized enterprises. Technological centres and centres for strategic services will attract more intensive support in the form of cash support of job openings in all regions or by decreasing the limits for new job openings for strategic investments.
The article is part of dReport – September 2019, Tax news; Grants and investment Incentives.
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