Czech Finance Minister outlines plan to allow companies to pay taxes in euros and consider more debt in euros | Investment News

By Jan Lopatka and Jason Hovet

PRAGUE (Reuters) – The Czech government’s plan to let companies pay their taxes in euros from 2024 will allow the state to increase its borrowing in euros and it expects “low tens of percent “Businesses are making the switch,” Finance Minister Zbynek Stanjura told Reuters. .

The plan, which the government wants to push through parliament early next year, would allow value added tax and corporation tax in euros instead of kroner, he said, giving details on a plan the government announced when it took power late last year. .

The Czech Republic, one of eight members of the European Union outside the EU’s common currency area, has no firm date for adopting the euro, but the move would save the economy heavily dependent on exports to euroization.

“As we come up with this, we will, I believe, resolve a big conflict in the business community, where the smaller part, the exporters, will welcome it and want it for a long time, and the rest will not,” said Stanjura in an interview Thursday evening.

He said the government did not know how much government revenue from businesses would shift to the eurozone currency.

“We cannot automatically assume that every exporter…will choose to do so,” he said.

“If I had to make a rough estimate, it would be less than tens of percent… 10,20,30, it’s really rough, we don’t have a more detailed analysis.”

Last year’s Czech budget included 129 billion crowns ($5.53 billion) in corporation tax and 299 billion crowns in value added tax.

Stanjura said further steps towards joining the euro were not being considered because the ruling five-party coalition has varied approaches – from the very pro-euro Pirate and TOP09 parties to the more skeptical Civic Democrats of Stanjura.

If the change is approved, which Stanjura has said it wants to do under a new accounting law by early 2023, it could lead to a higher proportion of public debt in euros, he said. declared.

“We are starting a debate on, when we estimate an increase in public revenues in euros, how this will be reflected in the financing of the state debt,” he said.

“The key decision must be taken next year for the (funding) strategy from the year 2024.”

The government redeemed its last outstanding eurobond last month and has only €1.5bn of euro debt left under local law, the ministry’s debt chief said. to Reuters last month was the preferred way to raise debt in euros.

($1 = 23.3480 Czech crowns)

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

Copyright 2022 Thomson Reuters.

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