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Czech Statutory Auditor Exam study materials
Czech Statutory Auditor Exam study resources

Czech Statutory Auditor Exam: Tax law and tax accounting

Czech Statutory Auditor Exam · Work through your exam, one topic at a time.

All guide sections

Tax law and tax accounting

What this domain tests

Whether you can convert accounting profit into a tax base and recognise the limits of accounting figures for tax purposes, under Act No. 586/1992 Coll. (Income Taxes), Act No. 235/2004 Coll. (VAT), Act No. 280/2009 Coll. (Tax Code) and Act No. 593/1992 Coll. (provisions for tax purposes).

Core rules

  • Corporate income tax 21% from 2024 (19% previously); VAT 21% standard and 12% reduced from 2024 (previously 15%); personal income tax 15% with a 23% band above 36× average wage.
  • The tax base starts from the accounting result, adjusted for non-deductible expenses, non-taxable income, differences between accounting and tax depreciation, and losses carried forward for 5 years.
  • Typically non-deductible: fines and penalties, general bad-debt provisions, representation costs, gifts outside statutory limits, and costs of unrealised items.
  • Provisions and bad-debt allowances are deductible only under Act No. 593/1992 Coll. (e.g. provisions for repairs and warranties, allowances to debtors in insolvency).
  • Deferred tax accounts for temporary differences between carrying amount and tax base and must be assessed for materiality.

Worked example

Accounting profit CZK 12,000,000. Add back: a fine CZK 300,000, representation CZK 200,000, a general bad-debt provision CZK 100,000. Accounting depreciation was CZK 1,800,000 and tax depreciation CZK 2,400,000, so deduct the CZK 600,000 difference. Tax base = 12,000,000 + 300,000 + 200,000 + 100,000 − 600,000 = CZK 12,000,000. Tax at 21% = CZK 2,520,000. Reasoning: every adjustment must be tied to a specific section of the Act, and symmetric adjustments such as depreciation go in both directions.

Traps

Deducting any general provision; forgetting that tax depreciation is claimed as one annual amount, not per asset in the accounts; treating VAT as an expense where the entity is a VAT payer; ignoring the loss carry-forward restriction on a change of ownership; assuming VAT registration thresholds and reverse-charge rules do not affect the audit programme.