Czech lower house backs return of digital sales registry to boost budget income

PRAGUE, July 15 (Reuters) - The Czech lower house on Wednesday approved government plans to reintroduce an electronic sales reporting system for businesses, a move aimed at curbing the grey economy and raising budget revenue by an estimated 14 billion crowns ($660 million) a year.

• The Finance Ministry said the retail sales reporting system would be simpler and more advanced than an earlier version which was suspended during the COVID pandemic and eventually cancelled by the previous government.

• The system should begin in 2027, although the legislation still requires Senate approval.

• Prime Minister Andrej Babis' government has pushed for the system, known as EET, since taking office at the end of last year, seeking additional revenue to fund election promises while keeping deficits within European Union limits.

• The ministry said the additional funds from EET would allow the government to restore tax deductions that were previously abolished, including those for kindergarten fees, and tax breaks for students.

• The previous government made fiscal consolidation a key priority, reducing the budget deficit to below the EU's 3% of GDP ceiling, at about 2% in both 2024 and 2025.

• Under current plans, the central government budget deficit will widen to 310 billion crowns in 2026 from 290.7 billion crowns in 2025, while the overall fiscal deficit is projected at 2.6% of GDP this year and 2.8% in 2027, before narrowing again.($1 = 21.2180 Czech crowns)

(Reporting by Jason Hovet. Editing by Mark Potter)