The Ministry of Finance, in its financial report no. 34 of October 2021, announced the entry into force of important news for energy consumption in November and December of this year.
Finance Minister Alena Schillerová has decided to apply an extraordinary value-added tax benefit for the electricity and gas supply. The decision has been taken in response to the general increase in global commodity prices. The Ministry of Finance’s plan regarding VAT would appear to be much bigger: a proposal to amend the VAT Act has been submitted to the Government, with the intention of making the supply of electricity and gas (currently taxed at the ordinary 21%
rate) exempt from the application field of the tax for the entire year 2022, with effect from 1 January 2022.
In his words, the Minister of Finance wanted to emphasize the positive impact that this decision would bring to families’ budgets: “The current and unforeseen increase in energy prices has a strong impact on household balance and it represents an extraordinary economic situation. The Czech Republic, in compliance with EU law, has requested to the Economy European Commissioner the possibility to apply a zero VAT rate. I expect that this request will be met, considering the European scale of the problem, and the Czech Republic will be able to follow up the temporary exemption with an amendment to the VAT Act, which will take effect on 1 January.”
In the European context, this decision joins other maneuvers taken by Central Governments to struggle with the rising energy prices. Finance Minister Alena Schillerová concludes: “With these interventions, we join all responsible governments around the world that are currently addressing the issue of how to mitigate the impact of rising energy prices on households. As in the case of respirators, where the VAT reduction was immediately reflected in prices for end consumers, we want to support households by introducing a zero VAT rate on electricity. A household paying CZK 1,000 per month for electricity will save around CZK 350 in its billing for November and December“, adding that thanks to the proposed amendment it will be possible to continue with the exemption throughout 2022.
Source: www.societapraga.cz
