Czech Republic reinstates fuel price restrictions and prepares tax for refineries

The government of the Czech Republic decided to regulate maximum prices for gasoline and diesel again from October 1 due to a new sharp rise in fuel prices. At the same time, the authorities will reduce the excise tax on diesel and prepared a temporary 50-percent tax on the increase in the margin of oil refining companies.

According to the decision of the Czech government, the Ministry of Finance will set the maximum price of gasoline and diesel daily from October 1. The sellers' margin will be limited to 2.50 koruna per liter. For now, the regulation is introduced until October 31.

The maximum prices will be calculated on the basis of a moving three-day average of wholesale fuel prices with the addition of the allowed trade margin. A similar mechanism already operated in the Czech Republic in the spring and early summer, but in July the authorities abandoned price restrictions after the stabilization of the oil market.

At the same time, the government will reduce the excise tax on diesel fuel from 9.95 to 8.011 koruna per liter - the minimum level allowed by EU rules. Excluding VAT, the tax burden will decrease by 1.939 koruna per liter. The excise tax on gasoline is not planned to be changed.

Prime Minister Andrej Babiš stated that after the introduction of the measures, the government expects to bring fuel prices below 50 koruna per liter again. According to CCS, which was cited by Czech media last week, the average price of Natural 95 gasoline has already reached 45.55 koruna per liter, and diesel - 49.13 koruna. Gasoline rose to a maximum since summer 2022, diesel - since March 2022.

Separately, the Ministry of Finance of the Czech Republic has prepared a temporary emergency tax for the oil refining sector. The rate will be 50% of the increase in gross margin compared to the 2025 level. The tax is proposed to be applied to the results of 2026 and 2027.

Large companies with annual revenues of at least 2 billion koruna, of which at least 50 million koruna come from oil refining activities, will be subject to taxation. According to the Ministry of Finance's assessment, under the current market structure, these criteria can actually be met by only one taxpayer: two Czech oil refineries in Litvínov and Kralupy nad Vltavou are managed by one legal entity.

The government expects to receive about 5.5 billion koruna from the new tax for 2026. The funds are planned to be directed to the state budget to partially compensate for the costs associated with high fuel prices. For comparison, the previous reduction in the excise tax on diesel already cost Czech public finances about 3.7 billion koruna.

The Ministry of Finance explains the introduction of the tax by a significant increase in the difference between the cost of crude oil and prices of finished petroleum products. According to the ministry, after the partial restoration of supplies, oil prices stabilized faster than prices for gasoline and especially diesel, which allowed oil refiners to significantly increase the margin. The draft law with the new tax has already been approved by the government, but to enter into force it still has to pass the legislative procedure.

Fuel prices in the Czech Republic began to grow rapidly amid the new escalation of the situation in the Middle East, rising oil prices and a shortage of refining capacities. As early as September 17, the average cost of gasoline was about 10 koruna per liter higher than a year earlier, and diesel - almost 15 koruna higher.

Based on materials from: the Government of the Czech Republic, the Ministry of Finance of the Czech Republic, ČT24