Czech cabinet approves 7% digital tax

The cabinet approved the introduction of a 7% tax on online advertising revenue, according to an announcement after a cabinet meeting. The tax will take effect as of the middle of 2020 and will have a limited duration, at least in this phase, until 2024. It will cover companies with annual global revenue at EUR750m or above, domestic revenue of at least CZK100m and at least 200,000 accounts. Given the criteria, local web portals like Seznam.cz will not fall under the purview of the tax and it will cover only Internet giants like Google, Amazon, Facebook and Apple. The fiscal impact is expected to reach CZK2.1bn in 2020, according to the 2020 budget bill and related documents. In following years, the tax could bring about CZK5bn.

The later introduction of the tax next year explains why it wasn’t part of the tax package that has already been sent to parliament. It does figure in the 2020 budget bill, however, so it will have to pass through parliamentary scrutiny. There has been heavy lobbying by Internet giants lately against the tax, but the government is not bulging. There are already warnings that the Czech Republic could face a response from the United States or that online advertising could become more expensive as a result.

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