Czech government will unweil details about tax reform today at 16:00 CET. Government plans among other changes to adjust VAT and corporate income tax. Market speculates that lower VAT should increase from 5% to 9% and corporate income tax could be decreased from current 24% to 19%.
Our view: Although no specific figures are known yet, we see increase of VAT as negative for Zentiva
, when drugs are taxed with lower VAT. On the other hand decrease in corporate income tax as of 2008 should be beneficial for Czech based companies like CEZ, KB
, TEF O2
CR or Pegas.