PRAGUE Dec 1 The Czech government launched an
online sales-reporting system on Thursday for around 40,000
bars, restaurants and hotels in a bid to cut tax avoidance, but
raising concern that prices will jump and many pubs at the
centre of village life around the country will close.
The "EET" system requires outlets to report every
transaction online and print out a receipt that can be matched
against its transaction database.
The Finance Ministry is hoping to bring in up to 660 million
euros in extra tax revenue a year once the system is extended to
all retail outlets over the next two years. The value-added tax
on meals has been cut to 15 percent from 21 percent to help pubs
bear the cost.
The chamber of commerce has been supportive of the law as it
will help honest businesses. But small-business representatives
say the costs of getting cash registers, Internet connections
and running the system will be too high in an already stretched
Plzensky Prazdroj, the largest brewery group and
maker of Pilsner Urqell, said hundreds of pub customers have
stopped ordering kegs, indicating that at least some were
"It has been mostly smaller and countryside pubs, which do
not serve hot meals," said Tomas Mraz, head of restaurant sales
at the brewery. "We expect the main impact from EET will come at
The Czech Republic, home to the original pilsner lager, has
the highest beer consumption per capita in the world at around
140 litres annually. A world-topping 40 percent of that is
draught beer in pubs, which are often the centre of social life.
Supporters of the system say that those closing down
probably include many that failed to declare income for
value-added tax and used unreported revenue to pay staff under
the table, avoiding payroll taxes.
"The project is a success if only because it levels the
business environment," Babis told Lidove Noviny newspaper on
Thursday. "EET will instantly straighten wages in the restaurant
Pubs, which often supplement their income with slot
machines, have already been under pressure from tougher gambling
regulations, and some fear a planned smoking ban would be
"(EET) is just another hit. Nobody in the business, perhaps
apart from large hotels, has been declaring full revenue," one
restaurant owner from the east of the country told Reuters on
condition of anonymity. He is closing his business.
An owner of several mid-range Prague restaurants said prices
were going up to make up for the extra costs. "People I know are
raising prices by about 10 percent," he said.
(Reporting by Jan Lopatka; Editing by Hugh Lawson)