Consolidation package – change in corporate income tax rate and related effect on deferred tax calculation

The consolidation package, or the “recovery package” as it is mainly called by the government, brings a number of changes, which we have informed you about in greater detail in our previous articles. One of these changes is a change in the corporate income tax rate. The tax rate will increase from the current 19% to 21%. This change will take effect from 1 January 2024.

Everyone will probably immediately realize that they will need to use the new tax rate when preparing regular corporate income tax return for tax periods beginning after 1 January 2024. However, a smaller number of people can think of another impact, namely that this change in the tax rate must also be reflected in the calculation of deferred tax, already within the accounting/tax year 2023, or the previous accounting period before the change takes effect. This is because deferred tax is calculated at the income tax rate applicable in the period, in which the tax liability or tax asset is incurred. And it is this tax rate that is now changing, i.e. when we draw up the financial statements for the 2023 financial year, we will know that the future tax rate will no longer be 19%, but 21%.

So be sure to update your calculations.

Author: Petra Čechová