Work detail

Tax Expenditures: The Extent of Corporate Tax Breaks in the Czech Republic

Author: Bc. Anastasia Pankina
Year: 2015 - summer
Leaders: doc. Petr Janský Ph.D.
Consultants:
Work type: Bachelors
Language: English
Pages: 79
Awards and prizes:
Link: https://is.cuni.cz/webapps/zzp/detail/135776/
Abstract: Until 2014 the Czech Republic has never published reports on tax expenditures. This
paper deals with the analysis of corporate income tax breaks, their estimation,
reporting practice and effect on the state budget. The main purpose of this paper is to
analyze and estimate the extent of corporate income tax breaks in the Czech Republic
from 2008 to 2013. In order to compute tax expenditures we applied a revenue
forgone method. According to our estimations, most of the corporate income tax
expenditures in the Czech republic were growing gradually during the estimated
period, except of tax breaks for expenses on R&D and investment incentives, which
increased more than twice from 2008 to 2013. We assume that this increase is a
consequence of government reforms oriented to promote R&D and inflow of
investments in the Czech Republic. Also, we compared our results with previous
study on this topic and discussed the differences. In 2012 corporate tax expenditure in
the Czech Republic accounted for about 1.6% of total state revenue from taxation, the
comparison with estimates from other EU member states and US indicated that
commonly this number does not exceed 2%. Moreover, during our analysis of
corporate income tax breaks in different countries we noticed that high and sharp
increases of total tax expenditures are mainly the results of huge VAT and personal
income tax breaks.

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