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Czech lawmakers pass wind income tax on energy companies, banks According to Reuters



© Reuters. FILE PHOTO: People ride a pedal boat on the Vltava river following an outbreak of the coronavirus disease (COVID-19), in Prague, Czech Republic, June 22, 2020. REUTERS/David W Cerny

By Jason Hovet and Jan Lopatka

PRAGUE (Reuters) – The Czech House of Representatives on Friday passed a sudden 60% tax on energy companies and banks, aiming to raise $3.4 billion next year from allegedly excessive profits. to finance people and companies affected by electricity and gas price spikes.

Electricity prices in Europe have risen sharply since Russia invaded Ukraine and cut off Russian gas supplies.

The center-right government in Prague is looking to tax more profits from energy groups such as the majority state-owned utility CEZ, and other energy traders, miners, oil refineries, etc. fuel traders wholesale and from major banks.

The plan angered affected industries and prompted a major energy company to announce it would be moving its trading operations overseas.

The tax, similar to that imposed by other European countries, will apply for three years from 2023. The bill still has to win Senate approval.

The Czech tax goes beyond the EU’s agreed regulation as it includes electricity producers, which are already affected by EU-wide price caps on wholesale electricity prices, and banks.

Tax on profits in excess of 120% of the 2018-2021 average and above the corporate tax rate of 19%.

The government aims to raise around 85 billion crowns ($3.40 billion), or about 1.2% of gross domestic product, over the next year alone through pre-tax payments and smaller sums in the next two years.

Even with this extra revenue, the government projects a central state budget deficit of around 4% of GDP next year.

Germany and Italy have also begun imposing a wind tax, followed by a 25% tax on energy groups. The UK government is considering a plan to extend the wind tax on profits of oil and gas companies.

Hungary has gone after the huge earnings of banks and energy companies.

The Czech tax will mainly hit the CEZ, as well as oil refiner ORLEN Unipetrol, which has warned it could hurt its investments.

The tax also affects the six largest Czech banks – CSOB, Ceska Sporitelna, Komercni Banka, UniCredit, Raiffeisenbank and MONETA.

ACCESSORIES

Power producers and coal miners that will be affected include privately owned EPH and Sev.en Energy.

The privately held EPH said the decision to include revenue from foreign trade in goods was “absolutely absurd”. It said it would move its commodity trade – with a volume expected to be more than 500 billion euros this year – abroad.

EPH Communications Director Daniel Castvaj said: “Our European trade will grow in a different jurisdiction, the state budget will lose billions of dollars in revenue and the Czech Republic will lose economic activity. with extraordinary added value”.

Sev.en said the “unprecedented” tax would “take money away from the only companies capable of investing in new heating and power plants”.

Shares in CEZ and banks rose on Friday but have fallen in recent months, with CEZ down 34% at 812 Crowns from June’s 13-year high.

CEZ has forecast its adjusted net profit will triple this year to 60-65 billion crowns ($2.60 billion).

Milan Lavicka, an equity analyst at J&T Banka, said CEZs will be hit the hardest, adding: “The impact on banks is not too bad as profits are not so high in the sector. banking sector.”

Komercni Banka reported a 34% increase in third-quarter net profit year-on-year on Friday. MONETA has estimated the tax impact to be 2 billion euros in 2023-2025.

($1 = 25.0010 Czech crown)



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