On 15 May 2023, the Czech Ministry of Finance initiated a public consultation on a draft bill aimed at implementing the OECD’s Pillar Two global minimum tax rules. This implementation is in accordance with the EU Minimum Tax Directive 2022/2523. Public comments on the draft bill are requested by 12 June 2023. The bill includes following features of Pillar Two rule:
- Starting from 31 December 2023, the Domestic Minimum Top-up Tax (DMTT) and the Income Inclusion Rule (IIR) will be applicable for financial years commencing on or after that date.
- The draft bill considers the transitional safe harbors rule.
- The Undertaxed Profits Rule (UTPR) is scheduled to take effect one year later, specifically for financial years starting on or after 31 December 2024. However, there is an exception where the UPE (Ultimate Parent Entity) of the group is situated in an EU Member State that has chosen to defer the implementation of the Income Inclusion Rule (IIR) and Undertaxed Profits Rule (UTPR) as per Article 50 of the Directive. In such cases, the UTPR will be applicable for financial years commencing on or after 31 December 2023.
- The Czech DMTT would generally be calculated in accordance with the general GloBE rules.
- Taxpayers would be required to register for the top-up tax within 15 days of becoming liable for it.
- To fulfill their obligations for the DMTT, taxpayers must submit a self-assessment tax return and a GloBE Information Return (GIR) within 10 months after the tax period ends.
- For IIR and UTPR, taxpayers would require to file a GIR within 15 months after the reporting fiscal year end. Additionally, a self-assessment tax return may require to submit within 22 months after the tax period ends.
- Failure to comply with the GloBE rules may result a fine up to CZK 1,500,000.
