The legislative process concerning the digital services tax bill is not over yet. The bill was suspended in the second hearing during the 58th meeting of the Chamber of Deputies, which was opened on 15 September 2020, as two new motions to amend emerged.
One comment suggests reducing the digital services tax rate again, namely to 2%; this marks another adjustment of the rate this year, as a decrease from 7% to 5% was proposed several months ago. These steps could be influenced by the reports that the USA plans to introduce retaliatory tariffs in connection with the implementation of the digital services tax; additionally, there are fears that the tax burden could be transferred to Czech entities using these digital services.
Will the Act’s effective date be postponed?
In addition to the reduction of the tax rate, there was another motion to amend that suggests postponing the effective date of the Act by one year, i.e. to 1 January 2022. This comment was justified by the fact that postponing the effective date may create space for finding a conceptual solution on the OECD level. As the discussions regarding the fair taxation of technology giants have been happening within the OECD and EU for several years without finding any consensus, it is rather unlikely that this will happen in 2021.
There is not much time left until the planned effective date of the digital services tax implementation, i.e. 1 January 2021, and we still do not have clear information about the final form of the Act. Therefore, postponing the effective date seems to be a convenient solution that could grant companies the space needed to familiarise themselves with the wording of the Act and prepare for the tax obligations arising from it.