Czech Government Wants to Reduce VAT for Gas and Electricity From 21% to 0%

Rise Gas Prices

With electricity and gas prices breaking records on the stock exchanges this year, Czechs will have to delve deeper into their pockets to foot their heating bills.

Minister of Finance Alena Schillerova announced that the government wants to support Czech households and intent to reduce the value-added tax (VAT) rate on electricity and gas to zero.

“If passed by the parliament, the zero VAT rate will also apply for this November and December. Unless approved also by the European Commission, waiving VAT on energy sales would contravene the European Union VAT directive,” she added.

The Ministry hopes for an exemption from VAT for energy for the whole of 2022

Wholesale electricity and gas prices are breaking records, the market situation caused the collapse of several energy supply companies in the Czech Republic.
Among them was Bohemia Energy, the company goes bankrupt, leaving almost 1 million Czech customers without a supplier.

The Czech Republic has one of the lowest levels of power import dependence in Europe due to its large reserves of hard coal and consistent growth in annual power generation.
As the country has large reserves of hard coal, coal-fired thermal power holds a significant share in the country’s generation mix.

In 2020, renewable power generation share in total generation in the Czech Republic stood at 11.1% and it is expected to rise only marginally to 13.4% in 2030.

Around 1/3 of the total electricity generated in the country is from nuclear power and the country will continue to depend on thermal and nuclear power generation to a large extent till 2030.
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