The VAT rate amendment discussed in Parliament

The bills currently being discussed at the ongoing September session of the Chamber of Deputies include the VAT rate amendment. The main intention of the government has been to introduce a third VAT rate of 10%, which would apply to books, medications, and infant formula. The 15% and 21% rates should be kept.

Several new amendments were presented during the session that could - if approved - significantly innovate the VAT system in the Czech Republic. We have selected a few of the presented amendments:

• Keeping the current 21% and 15% VAT rates, dropping the other reduced 10% rate, and a significant extension of supplies that are subject to the reduced rate (all categories admitted by the European Union VAT Directive);

• Keeping two rates and reducing them to 20% and 14%;

• Keeping two rates and reducing them to 21% and 10%;

• Extending the third 10% rate to veterinary medications.

Whether the amendment is approved in the original wording or the deputies agree with any of the presented changes will be clear after the second reading. We will inform you about the final wording of the VAT Act in our new issue of KempHoogstad Tax News.