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The European Union expects the Czech Republic to return 430 million CZK (21.5 million USD) worth of grant money, after it was revealed that the money had been misused by the Czech Ministry of Regional Development. On Thursday, the newspaper Právo reported that the European Commission had already asked for the first 330 million CZK to be returned, and would decide upon the final 100 million CZK later. The Czech Finance Ministry has confirmed the reports. The scandal surrounding the misuse of EU funds took place at the Ministry of Regional Development in the 1990s. In 2006, ten businessmen and some high-ranking ministry officials were found guilty of embezzling funds from the EUs Phare programme.

The Czech corporate tax regime is one of the least attractive in Europe, according to a survey conducted in 28 European countries by the KPGM agency. In the poll, more that 400 tax professionals across the continent compared their country’s taxation system to the rest of Europe. The Czech Republic, Greece and Romania ranked bottom of the ladder due to extensive and complicated legislation as well as frequent changes to the tax system. Czech respondents in the poll also complained that the Czech authorities lack clarity and comprehensibility when interpreting Czech tax legislation.

The Czech Republic has outlined several foreign policy priorities for its EU presidency in 2009. Among those highlighted are the Union’s relations with the Balkan states. As Czechs see it, the EUs visa policy for the Balkans and other Eastern European countries should be softened, and if the Czech government's ambitious plan succeeds, the Czech EU presidency should also see Croatia a new member state of the European Union.

The Serbian province of Kosovo is expected to declare independence from Serbia early this year. The Czech foreign policy on this hot issue has been following the moderate attitude of the European Union calling for an agreement between the Serbian government and Kosovo’s Albanian majority. But the lower house of the Czech Parliament might push for a change in the Czech stance. An opposition MP wants a resolution passed denouncing a unilateral declaration of independence for Kosovo.

Czech Deputy Prime Minister for European Affairs Alexander Vondra has rejected claims that the ruling Civic Democratic Party would try to delay the ratification of the European treaty for as long as possible in the hope that some other state would be the first to reject it. Speaking in a televised debate on Sunday, Mr. Vondra said his party had no such intentions and predicted that the new EU treaty could be ratified by Parliament within a matter of months – most likely by the end of the year. A number of senators and deputies for the Civic Democratic Party have criticized the treaty and said they would file a complaint with the Constitutional Court on the grounds that it was in violation of the Czech Constitution.

In Business News this week: the budget deficit is significantly lower than predicted; the prime minister signals an end to state support for building savings; the euro could be adopted as late as 2019, says the governor of the central bank; almost half the foreigners working in the Czech Republic would like to leave, citing trouble finding employment corresponding to their qualifications; and after years of growth, the number of mobile phone text messages sent on New Year’s Eve fell slightly.

The Czech government has chosen eight venues for holding informal meetings of ministers from the 27 EU countries during the Czech presidency of the European Union in 2009. Among the sites selected is the chateau in Hluboka nad Vltavou, South Bohemia, the Congress Centre in Prague, and various venues in the spa towns of Marianske Lazne and Luhacovice. The Czech Republic will assume the presidency of the European Union in January 2009. The motto of the Czech presidency is ‘Europe without barriers’ marking 20 years since the fall of the Iron Curtain and five years since the enlargement of the European Union.

In this week’s Business New: the Czech Republic to receive more funds from the EU; Home Credit starts off in China; Czech Railways plan record renovation; Czech food prices to go up in 2008; and CEZ Hungarian deal causes controversy.

A Czech operational programme aimed at drawing EU funds for support in the field of science is likely to be the last of all EU countries’ programmes to be approved by the European Commission. Czech officials will negotiate the details of the programme in late March at the earliest. The operational programme will make the Czech Republic eligible for up to 54 billion crowns (the equivalent of roughly 3 billion US dollars) in EU subsidies. Delays in the implementation of the programme forced Dana Kuchtova of the Green Party to step down as education minister in October.

The Czech Republic and eight other EU members joined the Schengen border free-zone at midnight Thursday. The lifting of border controls has created a vast border-free zone for 400 million Europeans in 24 countries stretching from Spain to Estonia. Czech Prime Minister Mirek Topolanek, Polish Prime Minister Donald Tusk and German Chancellor Angela Merkel attended celebrations at the border crossings Zittau-Friedenstrasse-Hradek nad Nisou, where the three countries’ borders meet, hailing the Schengen expansion as an important step to a one-tier Europe.