Weekly tax updates 24-06-21

Tax Thursday – Czech CIT compliance and tax update

CIT tax update
With the effective date of 1 January 2021, many changes in the Czech tax law were implemented. These changes include for example a further limit for tax depreciation of assets and its technical improvement, acceleration of tax depreciation for assets acquired from 1.1.2020 to 31.12.2021 and a cancellation of the category of intangible assets in the Income Tax Act, i.e., accounting depreciation of intangible assets will be relevant for tax purposes.

Tax rate
The regular rate is 19% and a special tax rate of 5% applies for income of certain investments, mutual and pension funds. These rates are applicable both in 2020 and 2021.

Tax base
The ax base is derived from the accounting result (profit/loss), that is calculated according to Czech accounting standards and is adjusted by items decreasing (tax non-deductible costs) and increasing (non-taxable revenues) the tax base. The accrual principle is followed in the Czech Income Tax Act.

Tax period
The standard taxable period is a 12-months period, either a calendar year or a fiscal year (any other 12-month period, always starting as of the 1st day of the chosen month). The taxable period may be longer or shorter in specific cases (e.g. change of calendar year to financial year and vice versa, year of establishment, entering into liquidation, etc.).

Deadline for submission
The eadline for submission of the CIT form is by the end of the third month after the end of the tax period. In case the form is submitted electronically the deadline is by the end of the fourth month. If the CIT form is submitted by a tax advisor, a lawyer or the company is audited, there is a prolonged period for the submission up to the end of the sixth month afther the end of the tax period.

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