Act No. 132 / 1995 Coll.
Act amending and supplementing the Act of the Czech National Council No. 593 / 1992 Coll., on reserves for determining the income tax base, as amended
Valid
Law
Effective from 01.08.1995
Text versions:
01.08.1995
25.07.1995
132
THE LAW
of 21 June 1995
amending and supplementing the Act of the Czech National Council No. 593 / 1992 Coll., on provisions for determining the income tax base, as amended
Parliament has decided on this law of the Czech Republic:
Act of the Czech National Council No. 593 / 1992 Coll., on reserves for the determination of the income tax base, as amended by Act No. 157 / 1993 Coll., Act No. 323 / 1993 Coll. and Act No. 244 / 1994 Coll., is amended as follows:
1. In Section 1, the following is inserted after the word "provisions':" and adjustments'.
2. In Section 2, the words "the provision for claims on debtors in bankruptcy and settlement proceedings," are deleted.
Paragraph 2 shall become paragraph 1 and the following paragraph 2 shall be added:
"(2) The weightings referred to in Article 1 shall be understood as the weightings applicable to claims on debtors in bankruptcy and settlement proceedings, bank-to-bank adjustments and the weightings payable after 31 December 1994. ';
3. In the first sentence of Section 3, the following words are inserted after the word "reserves':" and the adjustments' and the following words are added at the end of the second sentence: "and the adjustments'.
4. In Paragraph 4, the following paragraph 3 is inserted after paragraph 2, including footnote 3a:
"(3) The adjustment items are used to cover losses arising from the write-off of the claims for which they are created or to cover the difference between the carrying amount of the claim and the price of the claim agreed upon at the disposal of the transferee. 3a) The weightings shall be abolished in favour of the proceeds for the same tax period, where the reasons for which they were created shall be waived; the revenue resulting from their abolition increases the income tax base.
(3a) § 524 et seq. of the Civil Code, as amended. '
Paragraph 3 shall become paragraph 4.
5. In paragraphs 1 and 3 of Section 4, the following shall be inserted after the word "provisions':" and adjustments'.
6. the following paragraph 5 shall be added to Article 4:
"(5) The total amount of the adjustment appropriations for banks, including bank reserves, may not exceed the total amount of claims for which it is generated."
7.
Bank reserves and adjustments
(1) As expenditure (costs) for attaining, securing and maintaining income (1), banks (4) may create:
(a) provisions for standard credit claims up to 1% of the average state of these claims for the tax period;
(b) adjustments to classified credit claims or groups of claims with the same level of risk for the tax period up to
1% for outstanding amounts,
5% for non-standard claims,
10% for doubtful claims,
20% for loss-making claims,
(c) provisions for guarantees granted of 2% of the average state of these obligations for the tax period.
(2) For the purposes of this Act, credit claims shall mean:
(a) the standard where the debtor is in a favourable financial and pension situation and there is no doubt about the timely settlement of the entire claim;
(b) the observed deterioration of the criteria for repayment of principal, interest and charges since the loan was granted but no loss is foreseen at the time of the assessment of the claim;
(c) non-standard where there is a significant degree of risk. The repayment of principal, interest and fees in full is uncertain. Partial repayment of the claim is highly likely,
(d) doubtful where repayment of principal, interest and charges is highly unlikely. Partial repayment of the claim is possible and likely,
(e) loss-making, which has signs of irreversible or is partially recoverable at very low value. The bank shall report the claim as loss-making if the debtor is in bankruptcy or settlement proceedings.
The observed, non-standard, doubtful and loss-making credit claims are classified credit claims.
(3) The total amount of the formation of the weightings referred to in paragraph 1 (b) may not exceed 3% of the average state of outstanding credit claims for the tax period. This limitation does not apply to claims arising from guarantee payments; the adjustments to these claims shall be established in accordance with paragraph 1 (b).
(4) If, on the basis of the data provided by the commercial documents5) and the account6), the bank demonstrates the justification for making adjustments higher than those referred to in paragraph 3, or for making provisions for the guarantees provided under paragraph 1 (c), the Financial Office may recognise the creation of adjustments and provisions at the amount shown.
(5) The corrective item established pursuant to paragraph 1 (b) shall be cancelled if the reasons for its existence have ceased to exist or if the claim for which it was established has been barred.
(6) The provisions established under paragraph 1 (a) and (c) serve to write off or cover losses arising from the assignment of standard and classified credit claims and losses associated with the implementation of the guarantees provided. "
8. In Section 8, the words "Provisions for claims' are replaced by the words" Corrections to claims'.
9. In Article 8 (1), the words "Provisions for claims' are replaced by the words" Corrections to claims' and the words "which is a cost 'are replaced by the words" which is an expenditure'.
10. in Article 8 (2), the word "Reserve" shall be replaced by the words "Corrections."
11. Article 8 (3) reads as follows:
"(3) Adjustments shall be cancelled in favour of the proceeds following the results of the bankruptcy and settlement proceedings. ';
12. in the first sentence of Paragraph 8 (4), the word "reserve" shall be replaced by "adjustment appropriations." The second sentence is as follows: "In this case, the adjustments shall be cancelled in favour of the proceeds up to the amount of the outstanding part of the claims or up to the amount of their write-off according to the result of recovery."
13. after Paragraph 8, the following Paragraph 8a is inserted:
Adjustments to outstanding claims due after 31 December 1994
(1) Recoveries on outstanding claims payable after 31 December 1994, the production of which is expenditure (cost) on attaining, securing and maintaining income (1), may be made by taxpayers of income taxes charged in the double-entry system, provided that they do not generate any adjustments and provisions for such claims under Article 5, and that more than
(a) six months, up to 20% of the book value of the claim or the acquisition price of the claim (hereinafter referred to as the value of the claim);
(b) 12 months, up to 33% of the value of the claim.
(2) Only those liable to income tax who have filed an application to initiate proceedings against the debtor under the rules on arbitration or in court may make such claims subject to a higher formation of adjustments than those provided for in paragraph 1 and where more than
(a) 18 months, up to 50% of the value of the claim;
(b) 24 months, up to 66% of the value of the claim;
(c) 30 months, up to 80% of the value of the claim;
(d) 36 months, up to 100% of the value of the claim.
(3) The weightings referred to in paragraphs 1 and 2 may not be applied to claims arising from:
(a) as shareholders, shareholders, members of the subscribed equity cooperatives;
(b) between economically linked legal persons where the average of the shares in the capital of the other person or the average of the voting rights shares for the tax period (or part of the tax period) is more than 25%; the average of the shares shall be determined as a proportion of the sum of the stocks on the last day of each month and the number of months in the tax year or part thereof;
(c) between close persons, 13a)
(d) on loans, loans and advances.
(4) The adjustment appropriations established pursuant to paragraphs 1 and 2 shall be cancelled if the reasons for their existence have been waived or if the claim for which the adjustment item was established has been barred or if the reasons for which the amortisation of the claim is considered to be a cost of attaining, securing and maintaining income have occurred in accordance with the provisions of the Income Tax Act.
13a) Sections 116 and 117 of the Civil Code, as amended. '
14. in Paragraph 9 (2), the words "The provision for cultivation activities may constitute the income tax payer" shall be replaced by the words "The provision for cultivation activities shall be established." The following sentence shall be added at the end of the paragraph: "The reserve shall be drawn in the course of the work of growing activities and, if these work is not carried out in a budgeted volume, the reserve shall be cancelled. '.
15. in Article 10, the word "extraction15)" shall be replaced by the words "mining, mining reserve, 15)."
Transitional provisions
(1) Reserves created on the effective date of this Act pursuant to Article 5, amounting to 10% of credit claims after the agreed maturity date and 2% of credit claims with an agreed maturity of more than one year, may be used to cover losses arising from the write-down or assignment of classified claims, or to transfer them to the status of adjustments to specific classified claims or, where appropriate, to groups of claims with the same level of risk on that date. If the bank decides, the reserves created on that date of 2% may be transferred to the standard credit claims for more than one year to the agreed maturity period.
(2) The provisions created by the date of application of this Act pursuant to Article 8 on claims on debtors in bankruptcy and settlement proceedings shall be transferred to the status of the adjustments to the specific claims on debtors in bankruptcy and settlement proceedings on that date.
(3) The provisions of this Act shall apply for the first time for the 1995 tax period.
The President of the Chamber of Deputies of the Parliament of the Czech Republic is hereby authorised to declare in the Collection of Laws the full text of the Act of the Czech National Council No. 593 / 1992 Coll., on reserves for the determination of the income tax base, as is apparent from later laws.
This Act shall take effect on 1 August 1995.
Uhde v. r.
Havel v. r.
Klaus v. r.
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Regulation Information
| Citation | Act No. 132 / 1995 Coll., amending and supplementing the Act of the Czech National Council No. 593 / 1992 Coll., on provisions for determining the income tax base, as amended |
|---|---|
| Regulation Type | Law |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 25.07.1995 |
|---|---|
| Effective from | 01.08.1995 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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