What tax news are coming from January 2023?

Despite the beginning of the holidays, including the parliamentary ones, it is not a bad idea to summarise what changes in the field of taxes are planned for the next year. Their final form will depend on the legislative process, but a number of the items under discussion have relatively broad support across the political spectrum, so their passage can be expected without major problems.

The amendment foresees changes to the Income Tax Act, the Value Added Tax Act and the Tax Code, with the proviso that, with minor exceptions, the changes should be effective from 1 January 2023.

Changes to VAT

The main change in the area of VAT will be an increase in the limit for becoming a taxpayer from the current 1 million CZK. The new limit of CZK 2 million will be introduced. The main purpose of this change is to reduce administration on the part of taxpayers.

The changes should also concern the control report, in terms of calls for its submission and fines for breaches of related obligations. There should be an overall softening of the penalties and the possibility for taxpayers to respond to calls within longer time limits. The specific impacts should be as follows:

  • Reduction of penalties in case of late filing or failure to file an audit report for sole traders and limited liability companies in which a natural person is the sole shareholder;
  • extension of the deadline for filing a subsequent control report to 17 calendar days from the date of delivery of the notice.

Changes to income tax

Under the Income Tax Act, the upper limit for entry into the flat-rate tax regime will be adjusted, again from 1 million CZK to 2 million CZK. This change is related to the aforementioned change in the area of VAT. Newly, 3 bands will be introduced for those interested in the flat-rate tax, depending on the nature and amount of the taxpayer's income.

Another change includes the extension of extraordinary depreciation also for assets acquired in 2022 and 2023.

The Tax Code will be amended only technically in relation to the obligation to file certain forms electronically.

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