Petrol market purge ruins retailers
Approximately 200 companies managed to get hold of CZK 20 million for the mandatory security deposit and to meet other conditions stipulated by the latest amendment to the fuels law. More than one-half of the companies that have actively operated on the fuel market in recent times have reached the end of the road.
“As of 1 November, we registered 176 applications, 132 security deposits and 194 companies which have applied for the relevant trade licence,“ said Martina Kaňková, spokesperson of the General Customs Directorate. “Distributors had until midnight to apply for a registration and to provide the security deposit or alternatively a confirmation of a bank guarantee. The final number of (licensed) distributors will most likely be around 200,“ she added.
The impact of the stricter rules - implemented to counter tax evasion worth billions of crowns linked to illegal fuel imports - on the actual collection of value-added tax will become apparent only towards the end of the year. “The security deposits will probably bring about a quick result. However, I still fear there is room left for the creation of business chains in which tax disappears,“ said Ivan Indráček, chair of the Petrol Stations Association. According to some estimates, October‘s volume of dubious fuel imports was around 20 million tonnes i.e. approximately one-third of the long-term monthly average.
Customs officers will now start inspecting distributors to ensure only those complying with the new criteria remain in business. “The inspections will be nationwide. The selection of specific companies to be inspected will be at the discretion of the individual customs authorities,“ said Kaňková.
Czech Petroleum Industry Association Executive Director Jan Mikulec expected untaxed fuel imports to drop significantly. “The law acts in a preventative manner. In addition to the security deposits, distributors must meet qualification criteria and demonstrate they are free of debt. The market will be rid of companies that would have been selling extremely cheap fuel due to paying no tax on it,“ Mikulec added.
When the security deposits were introduced, representatives of smaller distributors claimed that small businesses are not profitable enough to deposit a hefty sum. “This will negatively affect construction companies or farmers who use small distributors to deliver diesel directly to their premises,“ Indráček said.