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Investment incentives await changes.

The objective is to provide more support for investments with high value added and for research, development and innovation

24.01.2017

Together with CzechInvest, the Ministry of Industry and Trade is considering adjustments to the investment-support system. Changes could also be adopted in the form of an amendment to Act No. 72/2000 Coll., on Investment Incentives. In connection with the Future Investment Support conference, Minister of Industry and Trade Jan Mládek and CzechInvest CEO Karel Kučera discussed this issue with representatives of the economics committee of the Parliament of the Czech Republic, the Ministry of Finance, the Ministry of Labour and Social Affairs, the Chamber of Commerce of the Czech Republic, the Confederation of Industry of the Czech Republic and other members of the expert public.

“The Czech economy is now in the best condition that it has been in for a long time. However, we cannot allow that to lull us into inaction. Investments are the driving force of economic growth and it is now the right time to think about the system for supporting them. In order for us to maintain the pace of growth and to not fall behind the most advanced western countries in the future, we should focus on increasing the share of value added in production rather than on increasing the volume of production,” said Minister of Industry and Trade Jan Mládek.

Support for investment projects with high value added, especially technology centres and business support services centres, should be increased. In future, such centres could receive cash grants for job creation and for training and retraining of new employees throughout the Czech Republic, whereas support is currently provided only in disadvantaged regions. Cash grants for acquisition of property could be increased for larger-scale technology centres. In the manufacturing industry, emphasis should be placed on projects with a certain long-term share of expenditures on research and development.

Elimination of obstacles in the area of employing workers is also under discussion, specifically the possibility of support for part-time jobs and adjustment of the period for retaining new jobs. The possibility of setting a minimum of paid wages is being considered. On the other hand, preservation of the current scope of incentives in the manufacturing industry in regions with high unemployment is anticipated. Implementing legal regulations, e.g. government decrees, should play a larger role in the investment incentives system.

“The purpose of the changes is to provide more support for investments with high value added, which bring forth wage growth and increase the population’s standard of living. This is not about support for new jobs, but about the quality of investments,” said Karel Kučera, CEO of CzechInvest.

Investment incentives have been provided in various forms in the Czech Republic since 1998. At present, they are used to support the manufacturing industry, technology centres and business support services centres. Incentives are provided in the form of corporate income-tax relief, cash grants for job creation and training and retraining of new employees, cash grants for acquisition of property and property-tax exemptions.

From 1998 to 2016, more than one thousand decisions to provide investment incentives were issued on the basis of registered applications. Based on those decisions, investors pledged to invest more than CZK 800 billion and to create more than 180,000 new jobs. The largest number of decisions were issued to investors in the Ústí and Moravia-Silesia regions. These most frequently involved vehicle manufacturing and mechanical engineering.

Drafting of the amendment under consideration is within the purview of the Ministry of Industry and Trade. CzechInvest should also play a role in the process and the amendment will be commented upon by other ministries and institutions, particularly the Ministry of Finance, Ministry of Labour and Social Affairs, the Confederation of Industry of the Czech Republic, the Chamber of Commerce of the Czech Republic and other such entities.