The US ambassador to Prague, Stephen King, has warned Czech deputies against introducing a government-proposed digital tax of seven percent, which would primarily hurt large US companies.
In a letter to the lower house, cited by the daily Hospodarske noviny, Mr. King says a 7 percent tax is discriminatory and warns that the US could effect retaliatory measures. He says it would be wiser to wait for broader regulation agreed on by the OECD.
Czech exporters also recently urged Prime Minister Andrej Babiš to reconsider the government’s proposal to introduce a digital tax. They said they feared damage to Czech-American business relations and possible retaliatory measures from the US administration.
The proposed digital tax of seven percent would apply to Internet companies in the Czech Republic with a global turnover of over 750 million euros (about 19 billion crowns), and domestic sales of at least 100 million crowns per year for taxable services.
It would hit companies such as Google, Facebook, Amazon and Apple. The tax, which should come into effect later this year, is expected to bring about five billion crowns a year to state coffers.