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Country Commercial Guides
FY 2000: Czech Republic
CHAPTER VI: TRADE REGULATIONS AND STANDARDS
A. Trade Barriers
The Czech Republic is committed to a free market and maintains a generally open economy, with few barriers to trade and investment. However, some technical barriers continue to hamper imports of certain agricultural and food products.
American business people also often cite a convoluted, or in some cases, corrupt, bureaucratic system, at both national and local levels, which can act as an impediment to market access. European companies have sought on occasion to use the Czech Republic's interest in EU membership to gain advantage in commercial competition. Additionally, some changes to standards and other regulations are adopted in the guise of EU harmonization but act to protect Czech interest. Efforts to improve transparency in economic decision-making will improve these potential trade irritants.
A lack of consistency in the application of customs norms can also act as a non-tariff barrier. These problems are primarily due to the newness of recent regulatory changes and recent expansion of customs personnel. Training efforts are underway to correct the situation and address these concerns. All of the above should be eliminated or eased as the Czech Republic continues to harmonize its regulations with EU norms.
B. Customs Regulations/Tariff Rates
The Czech Republic is a member of the World Trade Organization (WTO) and has adopted a tariff code with an average tariff rate of approximately 5%. Specific duty rates are published in the Czech tariff schedule based on the Harmonized System of Classification. As part of the free trade organization CEFTA (Central European Free Trade Agreement), which also includes Slovakia, Poland, Bulgaria, Hungary, Romania, and Slovenia, the Czech Republic offers more favorable customs duty rates on products originating in these member countries. In addition, the Czech Republic has an association agreement with the European Union as part of its EU accession process, and is lowering and or eliminating tariffs on an increasing number of industrial products under the agreement. Both scenarios mean that some U.S. products can face higher rates as compared to European competitors.
The Czech Republic adheres to WTO rules on customs valuation and therefore applies the same rules of customs valuation used by U.S. Customs for imports into the United States. Customs valuation is based on information provided by the exporter on the commercial invoice. Duties and taxes are levied on an ad valorem basis, that is, on the basis of the declared value of the goods sold.
In view of its status as a member of the WTO, the Czech Republic applies no special import provisions.
C. Import Taxes
The value added tax (VAT) applies to all goods, both domestic and foreign, sold within the Czech Republic. The VAT rate is generally 22%, although a lower VAT of 5% is charged for selected goods, such as food and pharmaceuticals.
Excise taxes are imposed on the following goods produced or imported into the Czech Republic: Fuels and lubricants, tobacco products, beer, wine and liquor. The rate is determined by the type and quantity of the product and must be paid within ten days after being notified by the Customs Office of the tax amount due.
D. Import Licenses
The Czech Ministry of Industry and Trade issues import licenses to those seeking to import selected goods into the Czech Republic. While most products and services are exempt from the licensing process, oil, natural gas, pyrotechnical products, sporting guns and ammunition require a license.
E. Temporary Goods Entry Requirements
The following are the most relevant temporary entry rules for U.S. exporters:
-- Temporary exemptions from duty are allowed for certain items, such as merchandise samples and items for display at trade shows or exhibitions. The Czech Republic also accepts ATA carnets as a way of facilitating temporary admission through customs. For more information about obtaining a carnet for clearance of goods, samples or equipment intended for temporary entry only, contact your local U.S. Department of Commerce Export Assistance Center.
-- Companies exporting goods to the Czech Republic for the purpose of temporary use may do so as long as the period does not exceed 24 months (in some cases it is possible to extend this). The exact time period must be agreed upon with Czech Customs. When the goods are re-exported, three percent of the duty value per month that the goods resided in the Czech Republic must be paid if the goods were used (maximum will not exceed full duty amount). Exports to the Czech Republic of raw materials and certain semifinished products that are processed before their re-export enter duty-free. This is contingent upon the approval by Czech Customs on the conditions of processing and the handling of any waste caused through transformation of the goods.
F. Import/Export Requirements and Certifications
U.S. companies are required to include a commercial invoice, a bill of lading and a shipper's export declaration (needed for items requiring an export license or valued above $2,500) when exporting to the Czech Republic. In addition, the importer must issue a declaration of conformity for each product introduced to the market. Czech law specifies products that need to be certified by an accredited person before the declaration can be issued. Depending on the nature of the goods, a veterinary health certificate and/or a certificate of origin (for concessionary customs rates, if applicable) can also be required.
G. Labeling and Marking Requirements
Labeling and marking requirements for products depend on the type of product and the intended use. In general, however, labels must be in the Czech language and can be affixed to the product or on a leaflet attached to the product. Information must include the name of the product, name of producer, country of origin, and in some cases, instructions for use. Labels for some products, such as foods, beverages, food supplements, and textiles, must also provide content/composition. In addition, international norms for warning labels on consumer products apply. Czech labeling requirements are almost completely harmonized with EU regulations; the process should be finished in 1999. Czech importers and distributors are responsible for the correct labeling of products that are put on the Czech market and can typically advise the U.S. exporter of specific requirements regarding labeling and marking.
H. Prohibited Imports
The list of prohibited imports includes certain veterinary and plant materials, Freon, non-registered pharmaceuticals and chemical, biological, and nuclear weapons.
I. Export Controls
The Czech Republic adheres to international export controls and works in close cooperation with the United States and other Western countries in implementing export controls on certain sensitive technologies. U.S. export controls on items exported from the United States to the Czech Republic are generally similar to those in effect on items exported to other Western European destinations. Contact the U.S. Department of Commerce, Bureau of Export Administration, Washington, D.C. (tel.: (202) 482-2547, fax: (202) 482-3617) for details on U.S. export controls.
J. Standards
The Czech Republic has begun accession negotiations with the European Union and is in the process of harmonizing its standards based on European norms. In this regard, ISO 9000 standards are being used increasingly in the Czech Republic as evidence of high product quality. Domestically, the "Czech Made" mark is the award given to products that are judged to be of outstanding quality, environmentally friendly, and favorable to energy consumption. This award is given to Czech products that are produced by a company or entrepreneur registered in the Czech Republic, with at least 60% Czech content in the cost of the final product.
K. Free Trade Zones/Warehouses
There are 11 free trade zones established in several cities throughout the Czech Republic. Materials, components and semifinished products are exempted from customs duties or VAT if they are exported into a free trade zone. If the goods are then used in the manufacturing or processing of a final product that is then reexported, it is also exempted from duties or VAT. Duties and VAT are applied on the declared value of the goods if they are cleared for free circulation within the Czech Republic.
L. Membership in Free Trade Arrangements
The Czech Republic is an associate member of the European Union and has recently begun accession negotiations for full membership, which is not expected before 2003. The Czech Republic is also a member of the Central European Free Trade Agreement (CEFTA) and has a special customs union agreement with Slovakia.
M. Customs Contact Information
Contact: General Customs Office, Budejovicka 7, 140 96 Praha 4, Ceska republika; telephone: 420-2-6133-1111; fax: 420-2-6133-3850.
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Note* International Copyright, United States Government, 1998 (or other year of first publication). All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U. S. copyright is not asserted under the U.S. Copyright Law, Title17, United States Code.
