Guidance on VAT Treatment of Bad Debt

Effective April 1, 2019, the General Financial Directorate (GFD) of the Czech Republic introduced significant changes concerning corrections of the tax
base in relation to bad debts. The GFD guidance explicitly stipulates that if a creditor’s receivable arose before the amendment’s effective date, but
involves insolvency proceedings commenced after April 1, 2019, the taxpayer must apply the new law. The GFD further draws attention to the fact that the
amendment allows for the correction of the tax base for receivables included in the approved reorganization plan, which was not possible under the original
wording of the act.

Source KPMG

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