Tax Efficiency of Czech Insurance Undertakings

Insurance undertakings belong to a group of highly profitable financial institutions, which is connected with higher level of tax liability. However, representatives of ruling parties in the Czech Republic are considering an implementation of new sector tax focused on commercial insurance undertakings in order to increase tax revenues flowing to public budgets. Tax efficiency is affected by several factors and trends including tax optimization. The implementation of new sector tax is therefore questionable. In order to assess benefits and negatives of additional taxation, tax efficiency has been verified. Insurance undertakings have been distinguished by market positions reflecting financial results of insurers, and different effects have been taken into account. Comparative analysis of tax efficiency respecting market shares of insurers has established a way to assess a level of tax burden on insurance undertakings in conditions of the Czech insurance market. Results of analysis have offered a consideration of tax adequacy concerning the implementation of new sector tax.