Czech government proposes new tax on refinery margins

The Czech government has proposed a new sectoral tax targeting refineries to capture windfall profits resulting from geopolitical disruptions in the oil market. The plan aims to tax 50 percent of the increase in gross refining margins compared to 2025 levels during the years 2026 and 2027. The sole taxpayer under this proposal would be Orlen Unipetrol.

The Confederation of Industry and Transport of the Czech Republic (SP ČR) has issued an open letter criticizing the measure, urging the government to withdraw or mitigate the tax. Industry representatives argue that the tax undermines market fairness, reduces investment predictability, and weakens the competitiveness of Czech industry.

Critics, including industry experts and the Confederation, point out that the tax is based on the flawed assumption that gross refining margins equate to profit. They argue this approach ignores significant operational costs, including energy, labor, maintenance, and emission allowances. The Confederation has requested that the tax not apply to current-year results and that the baseline for calculating margin increases be based on a multi-year period rather than just 2025.