The number of both corporate and personal bankruptcies declared in 2012 rose by 46 percent compared to the previous year, according to figures by the company CCB. Nearly 3,700 firms went bankrupt last year; most of them were self-employed people registered as entrepreneurs. Some 60 percent of bankrupt firms were active in the services, trade and restaurant sectors. Meanwhile, nearly 17,000 personal bankruptcies were declared in 2012 which was the highest number since their introduction into Czech law in 2008.
Czech taxes on fuel are the highest among all other eastern European member states, according to a report by the consultancy firm European Energy Portal. In VAT and consumption tax, the Czech authorities levy 0.689 euro per liter of diesel which represents 48 percent of the total price. They collect 0.758 euro per liter of petrol, or 54 percent of its end price. An association of Czech entrepreneurs and transporters last year complained about the relatively high fuel taxes, and called on the government to lower them.
With gloomy economic outlooks and continuing uncertainty on the job market Czechs are bracing for another tough year. In its determination to bring the deficit in public finances to below 3 percent of GDP in 2013 the centre-right Czech government recently pushed through a number of crucial reforms that will impact each and every citizen.
The Senate voted not to deliberate on a bill stipulating salaries for federal judges and tax regulations for lawmakers. The bill thus automatically passed through the upper house and will be going straight to the president to be signed into law. According to the bill, judges’ salaries will be calculated as 2.75 of the national average salary, instead of the current 2.5, as of 1 January. The monthly salary for a judge would thus come out to under 63,000 crowns. The legislation also exempts members of the parliament from paying health and social insurance on their salary bonuses. The bonuses will still be taxable.
The Czech Telecommunication Office is set to lower operator charges for mobile calls between different operators to a maximum of 41 hellers per minute, compared to the current 55 heller limit. In the middle of 2013 the upper limit should go down to 27 hellers. The decrease of the operator charge should lower the final cost of the calls, although that decision is up to the individual operators.
Interest in precious metals and stones in the Czech Republic, is reaching new highs, either for personal use, in the form of jewellery, but in the form of bullion as an investment. Czechs this year alone, for example, spent more than three billion crowns on gold bars, even though the price of the precious metal has almost doubled over the last two years.
The Czech Republic this year failed to meet two out of four criteria set by the EU for the adoption of the single European currency, the euro, according to a report by the Czech National Bank and the Finance Ministry. Due to a hike in the VAT rates, the Czech Republic did not meet the criterion of price stability. It also exceeded the three-percent limit on government budget deficit which is expected to reach percent of the GDP this year. The Czech Republic meets the remaining two conditions – government debt below 60 percent of the GDP and long-term interest rates. Although bound by its EU accession treaty to adopt the euro, the Czech Republic has set no date for doing so.
The Czech Telecommunications Institute will take more steps to regulate the country’s mobile services market, the institute said in a press release on Friday. The regulator found little competition on the market and said the four existing operators acted co-ordinately to keep up relatively high prices for mobile calling and other services. The institute wants to facilitate the entry of so-called virtual operators on the market, and is planning to introduce stricter regulation of whole-sale prices. A spokesman for Telefónica O2, the largest mobile operator in the country, said the firm would respect any decision by the regulator but said its assumptions were ungrounded as prices for private end users had decreased by nearly 40 percent of the last five years.
President Václav Klaus on Friday signed into law government legislation that raises the two VAT rates by one percentage point to 15 and 21 percent, respectively. The legislation comes into force on January 1. The package also includes a seven-percent hike in income tax for high earners and cancels tax brakes for economically active retired people. The Czech government based the state budget for 2013 on revenues from the tax hikes; Mr Klaus signed it into law despite his objections; earlier this year he said raising taxes at a time of recession was an “economic suicide”. Analysts estimate that on average, the hikes will cost Czech families around 1,000 crowns each year.
Following a vote in the lower house, the Czech Republic’s two VAT rates should increase on January 1. However, if the president – a critic of the change – doesn’t play ball, the bill cannot come into effect, and, with very few working days left before the New Year, that uncertainty represents a major headache for Czech businesses.
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