Other > 7/2/2016
Open letter to Mr. Martin Janeček, General Director of the Czech Tax Office
Dear Mr. Janeček I didn’t know your name a few months ago, but now it seems that you want us all to know you. You have been addressing us through the media. So I suppose you will be happy if a citizen addresses you back through the media too. I see that you belong to the young generation. You are only 36 years old, so I congratulate you on your rapid rise to this position, where you have influence over every business in the Czech Republic.
Mr. Jakub Horák tried to start a dialoguewith you too, last week. It didn’t really go to well, though did it? I don’t know Mr. Horákpersonally but he is well known in the media industry. He produces films, especially TV spots. He thought he should register his company for VAT, and your office asked him to give it a great deal of information, before he was allowed to do so. I read the list of questions you asked him and wondered why a business has to give such information, just so that it can pay tax. I wondered too, Mr. Janeček, how your people will interpret his answers, and what you will do with the information.
You did not tell us so far. All you said was that your office was “not doing anything illegal”. Well that’s good to know, I guess.
Mind you, Mr. Janeček, I was trying to think of a Tax Office that is known for doing illegal things, and the only one I could think of was the Russian one. Have you read “Red Notice” by Bill Browder, Mr. Janeček? I don’t recommend reading it at bedtime. And I definitely don’t recommend that you read it for inspiration on how the Czech Tax Office should behave.
Well the Czech Republic is often known as Absurdistan, and it is often us small business owners who find it most absurd. I would love to know what you think, Mr. Janeček, about the apparent absurdities that your office is creating.
For example among the many details of his business projects you asked Mr. Horák for, Question 7 in your letter was a request to know the names of all the actors in his TV spot.
Now, it is quite possible that Mr. Horák may be shooting a TV spot for Pedigree Petfoods. In which case his answer to Question 7 is likely to be “Five dogs”. Now, to the best of my knowledge dogs are not liable to charge VAT for their professional services, so I wonder what you are going to do with this information. There is also the worrying possibility that you might think he was making fun of you with his answer. Well, I have to tell you Mr. Janeček, that it could be worse. Mr. .ák might have been shooting this TV spot, in which case his answer would be “Two meerkats, and Arnold Schwarzenegger”. Well, I think if this was Russia, and Mr. Horák gave that answer, he would already be sitting in the gulag. The Russian tax office is not known for its sense of humour, I have heard. It seems to be rather vindictive. You are not a vindictive man, I hope, Mr. Janeček? You see when I was talking about Mr. Horák’s case with some people, they reminded me that in the past Mr. Horák did some media work for political parties which are now in opposition. But I am sure that your office would not single out Mr. Horák for “special treatment” because of that, would it? Surely not, because that might be illegal.
Well a few weeks ago you were again in the public eye, explaining why we are all now having to comply with the “invoice matching system”. Actually you spent some of my money doing this, since you took out a two page advertisement to do so. Mostly it just told us what we must do, and by way of explanation you simply wrote that this is only information that you have a right to. Well yes, it’s true that you have a right to know that on 27th January a taxi driver called Jarda Dvořak took me from Holešovice station to my office, and this was paid by my company. I sent you the receipt last week, did you receive it OK? Good. And did you find the details in Mr Dvořak’s submission to you? Does it all match? I hope so. There was not much else I needed to send you. One client invoice, our bills from Vodafone and UPC, maybe some bills from our IT company. I just wonder why you could not wait until the year end to get this from me. I wonder where you are actually going to store all this information. And I wonder who will be able to access this information. Most of all I note that because of this new requirement from you, I will have to pay my accountants 6% more each quarter (plus DPH). I wondered if you might suggest to Mr. Babišthat small businesses could get a corporate tax rebate to help pay these costs.
Well these extra costs (and the hidden costs of all this time wasting) are irritating enough but there is something else that really gets my blood boiling, Mr. Janeček. You see, like most European citizens I believe we should pay our agreed taxes. What really upsets us is when some people pay them, and others do not, because they are big and powerful corporations, who pay big and clever accountants to find ways of avoiding tax; and the Tax Office doesn’t seem to do anything about them.
You see while you are harassing Mr. Horák, for nothing, since he has not yet become liable to pay any DPH, another very big company in the advertising field is not getting much attention from you. I refer to Google. Maybe you heard that your colleagues in the UK Tax Office were criticisedfor agreeing a tax “deal”. with Google which most people thought to be totally inadequate. Some of those people in the Tax Office will be asked to appear before Parliament to explain themselves. And now last week Lidové noviny published an articlemaking much the same criticisms of Google in the Czech Republic. Are you going to investigate Google, Mr. Janeček? You see if not, I wonder if it means I could “do a Google”? Let me explain.
I have a friend in Dublin who contacted me to say he has some nice accountancy software, and suggested he could send my company’s invoices to clients from there. When I asked him why I should do this, he said that if I move my company address to his office in Dublin, we can say that all my sales transactions were “concluded in Dublin” just like Google does (and Facebook too). So I would pay my corporation tax in Dublin and not Prague. It sounded quite simple, and it seems to work well. My friends in the media agencies confirm that when they get their invoices for millions of crowns from Google or Facebook for advertising space for their clients, the invoices come from Dublin, and must be paid there. And that,despite Google having a nice office in Prague full of very smart marketing people, some of whom I know quite well, and who go to the media agencies to help sell the opportunity to advertise on Google. So would that be OK, Mr Janeček? I will continue to work here as now but my clients will get the invoice from Marketing Solutions Dublin? Actually it would be win-win, because it would mean I could stop paying DPH here, and sowill have less invoices I need to send to you each month. But somehow I have the feeling that you would not allow it in my case. I am just curious if you could explain how you allow it in Google’s case.
Still it is good that such a senior public figure who was previously anonymous, has made himself known to the citizens whose taxes pay his salary. I don’t expect you to reply directly to me Mr.Janeček, but I do hope you will think about what I have written. I want to do business in the Czech Republic, civilised EU country. Not in a satellite of Russia. And definitely not in Absurdistan.