Investor Presentaiton

Taxation of business income The starting point for computing taxable profit is the profit before tax in the Czech statutory financial statements. This is then subject to adjustments under the Income Taxes Act. Unless this Act contains a provision to the contrary, income and expenses booked for accounting purposes are taxable/ deductible. Where capital gains form part of business profits, they are taxable as normal income or exempt under the participation exemption rules. For companies, the taxable period is generally the same as the financial year. It is possible to adopt a financial year ending on a date other than 31 December, if it is the last day of a calendar month. If the financial year-end changes, provisions in the Income Taxes Act deal with the resultant long or short period. However, these are not perfectly drafted and numerous issues can arise in such cases. Individuals are always taxed on a calendar-year basis. According to the general rule of Income Tax Act expenses incurred for the purpose of generating, assuring or maintaining taxable income are tax deductible. However, there is number of exceptions which are defined by Income Tax Act. A special deduction equal to deductible expenditures on research and development (R&D) can be claimed and it effectively means that the expenditure can be deducted twice. If not used in the period in which it arises, this deduction, may be carried forward to the next three taxable periods. The Act on Provisions allows create tax-deductible legal adjustments to bad debt provisions if certain conditions are met. It also allows taxpayers to create tax-deductible reserves if certain conditions are met. The Act on Provisions contains special rules on loan reserves for banks and reserves for insurance companies. Tax depreciation, which usually significantly differs from accounting depreciation, can be claimed on tangible fixed assets. For this purpose, assets are divided into several categories. Depreciation on most assets may be claimed on either a straight-line or an accelerated basis. Beginning from the 2021 taxable period, there are no intangible assets 77

View entire presentation