Czech finance minister outlines plan to let firms to pay taxes in euros, look at more euro debt

By Jan Lopatka and Jason Hovet

PRAGUE (Reuters) – The Czech authorities’s plan to let firms pay taxes in euros from 2024 will allow the state to lift its borrowing in euros and it expects “low tens of p.c” of companies to make the swap, Finance Minister Zbynek Stanjura advised Reuters.

The plan, which the federal government needs to push by means of parliament by early subsequent 12 months, would enable value-added tax and company revenue tax in euros as an alternative of crowns, he mentioned, giving particulars of a plan the federal government flagged when it took energy late final 12 months.

The Czech Republic, certainly one of eight European Union members outdoors the frequent EU forex zone, has no agency dates for euro adoption, however the step would take the extremely export-dependent financial system additional to euroisation.

“In the intervening time we provide this, we are going to, I imagine, resolve an enormous battle within the enterprise group, the place the smaller half, exporters, will welcome it and have needed it for very long time, and the others not,” Stanjura mentioned in an interview late on Thursday.

He mentioned the federal government didn’t know the way a lot authorities income from firms would swap to the euro zone forex.

“We can’t mechanically assume that each exporter…will select to do it,” he mentioned.

“If I had been to make a tough estimate, it’s decrease tens of p.c … 10,20,30, that’s actually tough, we wouldn’t have a extra detailed evaluation.”

The Czech price range final 12 months took in 129 billion crowns ($5.53 billion) in company tax and 299 billion crowns in value-added tax.

Stanjura mentioned different steps towards becoming a member of the euro weren’t on the playing cards, because the five-party ruling coalition has various approaches – from the very pro-euro Pirate and TOP09 events to Stanjura’s extra sceptical Civic Democrats.

If the change is permitted, which Stanjura mentioned he aimed to do as a part of a brand new accounting regulation by early 2023, it might result in a better proportion of presidency debt in euros, he mentioned.

“We’re starting debate about, after we will estimate larger authorities income in euros, how it will likely be mirrored in financing state debt,” he mentioned.

“The important thing resolution have to be made subsequent 12 months for the (financing) technique from the 12 months 2024.”

The federal government repaid its final excellent Eurobond final month and now solely has 1.5 billion euros in excellent euro debt issued below native regulation, which the ministry’s debt chief advised Reuters final month was the popular solution to increase euro debt.

($1 = 23.3480 Czech crowns)

(Reporting by Jan Lopatka and Jason Hovet; enhancing by Philippa Fletcher)