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Czech finance ministry proposes $3.4 billion windfall tax on energy, banks

FILE PHOTO: EU finance ministers meeting in Brussels

PRAGUE (Reuters) - The Czech Finance Ministry proposed on Thursday to slap a 60% tax on excess profits for 2023-2025 in the energy sector and for large banks, minister Zbynek Stanjura said.

Stanjura told a news conference the tax would raise about 85 billion crowns ($3.41 billion) next year alone and apply to electricity and gas production, distribution and trading, as well as fossil fuel mining, oil processing, and wholesale fuels trading.

The proposal, which requires parliamentary approval, foresaw revenue of 50 billion crowns next year from the energy sector and 33 billion crowns from banks.

The overall revenue should drop to 39 billion crowns in 2024 and 25 billion crowns in 2025, the ministry said in a presentation.

The basis to determine excess profits will be average earnings in the previous four years plus 20%, it said.

The scheme will only affect large banks, defined by an earnings threshold of 6 billion crowns, it said.

The tax will be complementary to the European ceiling of 180 euros per magawatt hour of electricity made from other sources than natural gas and hard coal, above which all revenue will be taken by the government.

Stanjura said the ceiling should bring about 15 billion crowns net year.

($1 = 24.9390 Czech crowns)

(Reporting by Jan Lopatka; Editing by David Gregorio)