Final Word from Tuesday, September 30, 2003

Recent comments by politicians, central bankers and statisticians have highlighted the fact that foreign investors - and not just those getting incentives - are repatriating a large amount of profit from the CR. The effort to restrict dividend payments by future investors receiving incentives failed, but a lesser-known income-tax proposal from the finance ministry could be more successful at slowing the outflow of capital. If given final approval, the amendment would allow the ministry to require companies to provide more details about transfer pricing and related-party transactions. Companies using related-party contracts to transfer revenue to jurisdictions with lower corporate tax would in many cases have to report more income in the CR. Investors won't like this, but it'll be harder for them to argue this time that the ministry is acting unreasonably.Czech National Bank Statistical Office


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