Competitiveness, taxation and digital economy
On November 14th, 2019, the Institute for Politics and Society organized a business breakfast to discuss the change in digital taxation and how it affects not only the Czech Republic, but also American and other foreign companies. The discussion was moderated by Ondřej Malý and speakers included Andreas Hellmann, an American International Advocacy Manager, Stanislav Kouba, Deputy Minister for Taxes and Customs, Ministry of Finance of the Czech Republic, and Simona Hornochová, Tax adviser, Chamber of Tax Advisers of the Czech Republic.
The discuss had clear sides with Kouba siding with the Czech government’s decision to tax foreign digital companies, and Hellmann strongly disagreeing, clearly saying he is not in favor of the tax due to the design of it. Hellman believes that new tax is intended to target and tax American companies specifically. Hornochová was more neutral, but agreed with Hellmann that the new tax had many negative consequences for the future of digitization and the Czech market. In addition, she believes that the tax relied on fear-mongering and populism, where previously the Czech Republic was a “positive deviation” but now there is a clear shift to political thinking when dealing with this tax.
Hellmann had several points, backed with data and studies that he brought with him to the discussion. He argued that an E.U. study perpetuating the myth that American companies do not pay their taxes in Europe, was incorrect and referenced another study. Hellmann said this tax is a “bad idea internationally” and it will have “unprecedent damage to tax competition.”
Meanwhile, Kouba supposed while there were issues with the tax, that they were waiting for an official decision by the OECD before making any major changes. He argued that the tax was beneficial to the Czech economy in the long-run and that no matter what, a new tax needed to be put in place.
Overall, the discussion put Kouba on one side and Hellmann and Hornochová on the other. Kouba defended the new tax while Hellmann and Hornochová believed that in the long-run the tax would have negative outcomes that would hurt the Czech economy and decrease growth in the digital market and overall GDP.