New anti-dumping law
Three years after the Uruguay round of Gatt, the Czech Republic, a party to Gatt and a member of the WTO, has adopted national legislation in line with the agreement on the implementation of Article 6 of Gatt signed in Marrakesh on April 15 1994.
The Act on Protection against the Dumping of Imports took effect on July 10 1997. It enables the authorities to take appropriate anti-dumping measures, thus filling a loophole in Czech law. The Act declares itself compatible with the Agreement on the Implementation of Article 6 of Gatt and EU Regulation 384/1995 on Protection against the Dumpingof Imports and Non-EU Member States.
The anti-dumping procedure is to be overseen by the Ministry of Industry and Commerce. The procedure can be initiated by any person residing in the Czech Republic. A complaint must be supported by domestic manufacturers producing over 25% of the total volume of a comparable product. The initiator must pay a security deposit of Kr100,000 (US$3,050) which will be returned once dumping has been demonstrated. A final decision must be made within 12 months, in complicated cases within 18 months.
An anti-dumping ruling will be adopted if it has been shown that:
- the import of dumped products has taken place (the export price was lower than the normal value of a comparable product in a normal transaction in the exporting country); and
- the import has been substantially detrimental to the manufacturing sector concerned or has caused a substantial delay in the setting-up of a manufacturing process for comparable products in the Czech Republic.
The Act provides the following measures:
- An anti-dumping customs duty up to a maximum of the difference between the export price and the 'normal' price. It can be imposed for a maximum period of five years, though extensions are possible.
- As an alternative to customs duty, the Ministry can accept a commitment by the exporter to raise the prices of dumped goods or cease export immediately.
The Act allows an appeal against any of the measures (without suspensive effect) to the Minister and to a Czech court.
Amendment to income tax act
On July 31 1997 a bill amending Income Tax Act No. 586/1992, Coll, was passed. The bill forms part of the government's policy of lowering taxes, harmonizing domestic legislation with EU Law and combatting tax evasion.
The corporate income tax rate has been lowered by four percentage points to 35%, with effect from 1998.
The tax-effective status of a loss arising from the sale of shares and other securities has been curtailed: if the income from the sale of shares and securities in a tax period is less than the acquisition price, the difference will not be tax-effective. It will be recognized as a cost only in the subsequent three years. With the continuous fall in the share prices of many Czech companies, selling at a loss was a frequent and legal way of minimizing their income tax base. The amendment makes this practice illegal with immediate effect.
Changes in the taxation of dividends, liquidation remainders and similar income are designed to eliminate the differences between the taxation of income from abroad and income from within the Czech Republic. All such income will henceforth be taxed at a flat rate of 25% irrespective of provenance. Furthermore, the acceptance of low-interest credits granted by a capital or individual person from abroad has been facilitated. This source has been now exempted from adjustment, for the purposes of income tax assessment, to the arm's-length principle.
Import deposits abolished
Import deposits, introduced in April 1997 in an attempt to reverse the negative trend of the Czech Republic's balance of payments, were abolished on August 21. The April decree obliged importers to deposit 20% of the price of all imported goods interest-free with a designated bank for six months. The government is now in the process of evaluating the impact of import deposits.