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R&D tax support in the Czech Republic 19 October 200 9. Petr Hájek Supervisory Board Chairman of AFI PricewaterhouseCoopers, manager. PwC. Agenda. Tax support of R&D in the Czech Republic Association for Foreign Investments (AFI). PricewaterhouseCoopers.

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  1. R&D tax support in the Czech Republic 19October 2009 Petr Hájek Supervisory Board Chairman of AFI PricewaterhouseCoopers, manager PwC

  2. Agenda • Tax support of R&D in the Czech Republic • Association for Foreign Investments (AFI) PricewaterhouseCoopers

  3. Tax support of R&D in the Czech Republic Approved in 2005, applicable since 2006 Reasons for introduction: introduction of indirect (tax based) support of private investments into research and development (available in 15 EU countries) Aim to help to fulfill Lisbon strategy targets – annual investments into R&D at the amount of 3% of GDP until 2010 Support of R&D activities undertaken in the Czech Republic Expected costs for the state budget: CZK 3 bil. (EUR 120 mil.) Reality: 2005: 452 tax payers, R&D costs claimed: CZK 3,2 bil (EUR 125 mil.), costs for the state budget: CZK 0,83 bil. (EUR 32,5 mil.) 2006: 553 tax payers, R&D costs claimed: CZK 4 bil. (EUR 157 mil.), costs for the state budget: CZK 1 bil. (EUR 40 mil.) Main beneficiaries: automotive, pharmaceutical and chemical industry PricewaterhouseCoopers

  4. Tax support of R&D in the Czech Republic R&D costs can be utilized in the amount of 100 % as R&D tax allowance (it is possible to make use of them 2x) Each CZK 1000 of R&D costs => saving of CZK 200 (in 2009) Possible to make use of this support without any prior approval (in the tax return) => simplicity of the system The claim is transferable for three taxable periods Technological uncertainty, elements of novelty (projects need not to be succesful) Very competitive system when compared with other countries PricewaterhouseCoopers

  5. Tax support of R&D in the Czech Republic- opportunities R&D in the Czech Republic can be cheaper/more profitable Support of key activity of a company with direct effect on its competitivness It is not necessary to disclose the outcomes of R&D activities Possibility for significant decrease of tax burden Help to further develop Czech economy PricewaterhouseCoopers

  6. Association for Foreign Investment • Nearly forty professional consulting companies • Established in 1996 • Supporting CzechInvest in its activities • Comprehensive knowledge of the Czech investment environment • Providing broad range of services and facilitating the entry of foreign investors into the Czech market • Support for active development of the Czech Republic’s business environment and competitiveness • The AFI comprises a platform for communication between foreign investors, the state administration, universities and other entities in the Czech investment environment. The Association for Foreign Investment, martin.michalov@afi.cz Stepanska 11, 120 00 Prague 2, phone: +420 224 911 750-1, cell: +420 725 555 344

  7. Partnership to Support Foreign Direct Investment in the Czech Republic • Joint project of the Association for Foreign Investment and CzechInvest • The project is entering its ninth year • A number of prestigious events are organized every year, including e.g. the celebratory announcement of the Investor of the Year or Business Property of the Year • Participating companies display an active interest in the development of the Czech investment environment and the Czech Republic’s competitiveness • A substantial benefit for project partners consists in the prestige and greater visibility and awareness that come with involvement in the activities of the AFI andCzechInvest. The Association for Foreign Investment, martin.michalov@afi.cz Stepanska 11, 120 00 Prague 2, phone: +420 224 911 750-1, cell: +420 725 555 344

  8. Questions Thank you for your attention! Petr Hájek Tel: (+420) 251 151246 e-mail: petr.hajek@cz.pwc.com PwC

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