Czechia to collect significantly less windfall tax than expected

1 year ago 40

While the Czech Finance Ministry originally predicted that the windfall profits tax could bring CZK 85 billion (€3.5 billion) to the state budget, the ministry has now admitted that the actual amount will be much less than expected, as only a few billion Czech crowns will be collected.

Deputy Finance Minister Marek Mora announced the expected income at this week’s meeting of the Czech Parliamentary Committee. “I have no reason to contradict what the deputy minister said,” Czech Finance Minister Zbyněk Stanjura told Czech TV. “So in the political dictionary, it means up to five (billions of Czech crowns),” he added.

Additionally, an extra CZK 15 billion (€612 million) was expected from the cap on market revenues from electricity generation.

The windfall tax agreed at the EU level in 2022 was supposed to help member states tame the high energy prices they faced last winter.

According to a study by the EU Parliament, most countries are applying the windfall tax retroactively for 2022, when some energy firms’ revenues are skyrocketing. However, the Czech Republic has decided to introduce a 60% tax for energy firms, banks and refineries from 2023 until the end of 2025.

The decision to introduce the windfall tax caused a stir among Czech businesses, some companies even warned that they would leave the Czech market.

The Finance Ministry even questioned the previously approved time frame of the tax, as Stanjura said that the three-year period could be shortened.

“In any case, the windfall tax will not be extended. It was introduced for the sole purpose of temporarily covering emergency expenditure, not to become a permanent source of budget to offset current expenditure,” Stanjura posted on X.

(Aneta Zachová | Euractiv.cz)