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New instrument gives tax breaks for R&D in the Czech Republic

( 11 / May / 2004 )

On Friday, November 5 in the third reading of the Income Tax Bill No. 586/1992 Coll. the Czech Government passed new legislation providing tax breaks for research and development in the Czech Republic. The Chamber of Deputies voted yes on the modified bill which introduces a deductible item of 100% of costs allocated for R&D. The bill must now be passed by the Senate and the new legislation will then come into force on 1.1.2005.

The essence of the support resides in the fact that R&D costs, which can, of course, be regularly declared for tax purposes and included in every company’s costs, will now be able to be 100% deducted once more from the calculated tax base. The deductible item is thus a very effective tax instrument to support R&D. “It will provide major support to companies operating in the Czech Republic and will contribute to the higher competitiveness of the country,” commented Martin Jahn, Deputy Prime Minister of the CR for Economic Affairs.

The introduction of new tax breaks for R&D will help considerably to increase the attractiveness of the Czech Republic as a country suitable for such activities. Approval of this instrument of indirect aid should help after the phase of foreign investors’ arrival to make the Czech Republic attractive not only in terms of low operating and wage costs but also in terms of introducing activities with higher added value. It has succeeded in laying the foundation for increasing the technological standard of Czech industry and services, the foundation of lasting and healthy growth of companies and thus the whole Czech economy. One must also add that the approved modified bill is also one step towards satisfying the obligation to strengthen the European Union’s competitiveness, which the Czech Republic assumed as part of the so-called Lisbon strategy.

Source: Communication Department of the Deputy Prime Minister of the CR for Economic Affairs

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