Prague - Few reasons to be satisfied - that's what the Czech Republic has, at least when its attractiveness for foreign investors is discussed. In the latest research made by KPMG International in collaboration with numerous European tax experts, the Czech Republic scored the lowest.
The research conducted in July - August 2007 showed that unfavourable and complicated tax laws are not only a hindrance to local entrepreneurs but also discouragement to foreign investors.
Due to their extensiveness and complexity, Czech tax rules come as the worst from all the European Union member states. Romanians and Greeks share the last place with Czechs.
The top position is occupied by Cyprus, Ireland and Switzerland, whose tax legislations are praised for their consistency in tax law interpretation, stability and resistence to frequent tax changes. In addition, their tax rates are rather low.
Slovakia, the neighbor of the Czech Republic and a former part of Czechoslovakia, managed to reach the 8th position.
Make it simple
The survey showed that the most problematic aspect of tax laws seems to be their extensiveness.
"The results indicate that the biggest problem for European companies is insecurity and lack of transparency. Tax legislation is extremely broad and is often interpreted in an incoherent way. Simplicity - that should be a real challenge for European financial bureaus," said Jan Žůrek, a partner of KPMG Czech Republic.
Communication with tax authorities is generally seen as more or less satisfactory, especially in countries such as Ireland, Switzerland or Slovenia. The strongest discontent with tax offices is among the respondents from Germany, Spain, Italy, Greece and - yet again - the Czech Republic. Czechs evaluated the relations with tax offices at 27%, which is far below the European average of 60%.
A better tomorrow?
As for the tax law interpretation by tax authorities, no Czech respondent described it as coherent and transparent. The average score in the rest of the European countries is 30%.
The Czech tax reform, enforced 1 January 2008, is expected to bring more simplification this year and thus make the country more attractive to foreign investors. However, it is too early to say now.
