Czech Republic approves windfall profits tax for energy companies and banks

Czech senators at the vote to amend the Energy Act that taxes extraordinary profits of energy companies. – SENADO DE REPÚBLICA CHECA

The Senate of the Czech Republic has approved a tax on the extraordinary profits of energy companies and banks, with the aim of covering the cost of helping households and businesses in the context of rising energy prices.

The Upper House announced Thursday that senators have approved proposals to amend the Energy Act and the Tax Act.

«The measures in the amendments address, among other things, high energy prices and are intended to serve as a source of revenue to limit them,» the Czech Senate notes.

Revenues from the windfall profits tax on energy sectors–such as coal mining, oil and natural gas–are intended to cover the state’s extra costs from peak energy prices.

After this vote, the country’s president, Milos Zeman, has to sign the law into law. The rule will come into force next year until 2025.

The country’s Finance Ministry proposed the tax as a 60 percent tax surcharge on excess profits that are 20 percent above the average of the last four years, so that it expects to raise additional revenues of more than 3 billion euros, reports Czech news agency CTK.

Business groups criticized the plans, saying the tax would deter foreign investors and make the tax system as a whole less predictable, reports DPA.