This year, the tax on extraordinary profits will continue

The forthcoming tax on extraordinary profits should also apply this year. The leaders of the parties in the ruling coalition agreed on Tuesday, Deputy Prime Minister Marian Jurečka (KDU-ČSL) said.

Jurečka confirmed the agreement when he arrived at the government on Wednesday. “It was discussed yesterday at a coalition council meeting,” he said. “If we look at other states in the European Union, a large number of states will want to apply this to 2022,” he added.

On Tuesday, House Deputy Speaker Olga Richter announced the agreement on Twitter. “The banking and energy sectors have a windfall profit because of the war, it comes out of the pockets of citizens, and that’s where the money is supposed to go back,” she said.

The finance ministry had initially announced that it would propose a tax on extraordinary profits from January 2023 for three years for companies in the energy, banking, oil, and fossil fuel extraction sectors. “However, a certain number of companies have already demonstrated significantly higher profits this year due to this market situation,” the minister explained.

However, not all government coalition members agree that the tax should be in place this year. Even Jurečka’s party colleague-Agriculture Minister Zdeněk Nekula (KDU-ČSL) – is against it.

“I have my position on this and do not agree with everything. It is not a problem whether so much money will be collected. I would have reservations on retroactivity,” he told reporters before the cabinet meeting.

The special tax will operate as a 60 percent surtax applied to the excess profits of these companies, determined as the difference between the tax base and the average cost of the tax base over the past four years, plus 20 percent.

Finance Minister Zbyněk Stanjura (ODS) expects the tax to generate CZK 85 billion in revenue next year. In the following years, payments should be lower.

The European Commission has agreed that the tax on extraordinary profits should be at least 33 percent.