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Prior to the early nineties, the Czech Tax system was out of sync with its neighbouring countries. In 1993, a revolutionary change was brought about in the Czech Tax system. Several Acts were introduced which included Corporate and Personal Income Tax, Road Tax, Value Added Tax, Gift, Inheritance and Property Transfer Tax and also tax for Real Estate and did much to elevate the state of the Czech Republic economy and business. Separate legislations covered, Health, Social and Insurance contributions.
The Corporate tax states that Corporations must may a tax of 26% (which was reduced to 24% in 2006). For personal income, the tax rate is progressive, starting from 15% to 32%. As far as the Value Added Tax is concerned, the rate is 19% generally but there is a reduced rate of 5% on some specific goods or services.
There are also Withholding Tax on Dividends, Royalties and Interests, subject to several specifications. There are social and health contributions as well. The employee contributes 12.5% whereas the employer contributes 35% of the gross salary.
The road tax is different for different vehicles; from CZK 1200 to CZK 4200 for private passenger vehicles and CZK 1800 to CZK 50000 fro commercial vehicles like Trucks. The Real Estate transfer Tax of the Czech Tax System stands at 3% of the higher of the actual sale price/independent evaluation. The real estate tax is dependent on location, building and land.
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