International Property News

Income tax revenue up at record CZK 7.6bn in January

26th March 2008

Czech individual income tax revenues reached a record Kc7.6bn in January this year, the Aktualne.cz server has said, referring to the Finance Ministry.

The figure provides the first data on how the public finance reform works, the server says. The reform took effect as of January 2008.

January income tax revenues have never before been as high as in 2008, says Aktualne.cz, adding the sum is Kc200m higher year-on-year. The ministry had expected revenues of less than Kc7bn.

Experts think the record figure was due to the way entrepreneurs optimise their taxes.

After the reform, entrepreneurs can either pay a corporate income tax of 24 percent from their profits, as they did before, or pay out the profit in the form of extraordinary bonuses which are subject to the flat tax rate of 15 percent.

This was not possible before the reform as extraordinary bonuses were subject to the highest tax rate of 32 percent.

The state's individual income tax revenues will thus be higher than expected this year, but corporate tax revenues will be lower, the server says.

The Finance Ministry does not want to comment on the unexpectedly high tax revenues or speculations about entrepreneurs' optimising measures.

Next year, the flat tax rate on incomes should drop from 15 percent to 12.5 percent. But tax deductibles will also decrease and Czechs with lower wages, making up two-thirds of employees, will see their income fall again, says the server.