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Proceedings of the 29th European Safety and Reliability Conference.
Edited by Michael Beer and Enrico Zio
Copyright ©2019 by ESREL2019 Organizers. Published by Research Publishing, Singapore
ISBN: 981-973-0000-00-0 :: doi: 10.3850/981-973-0000-00-0 esrel2019-paper
Dynamic Model of the Finance Flows Secure Continuity into European Value Added
Tax Environments
Olga Burianova
University of Finance and Administration, Estonská 500, 10100 Prague 10, Czech Republic,
E-mail: olgaburianova@email.cz
Jiri F. Urbanek
University of Finance and Administration, Estonská 500, 10100 Prague 10, Czech Republic,
E-mail: urjf@yahoo.com
An orientation in the Czech and European tax systems is not simple, but our paper’s task is an identification of its
internal threats for continual flows disturbing of the funds. The security of financial cycle continuity in the public
budget system, respectively in the Czech budgetary systems is a complicated process at all levels. The
management of financial flows securing the continuity in the Czech Republic, as well as in other European
Community countries, they form the common basis for the finance flows into the European Union‘s budget. The
finance and security go hand in hand, as any measures, at any levels, aim to minimize diversification of risk and
hence to offset threats that could put the principles of the funding system at risk. The aim of this paper is, on
dynamic model map of major financial flows, to outline the entities and threats, which can negatively affect the
financing cycle in real time in the budgetary systems in legislative frames of Czech and European countries. The
factors and risks of becoming threats in real-time processes under given conditions and circumstances, need to be
continuously identified, monitored, audited, analyzed, evaluated, investigated, and subsequently eliminated. The
exquisite instrument, for the achievement of this paper's aims, is the application of special modelling and
simulation methodology for crisis scenarios - the DYVELOP method (Dynamic Vector Logistics of Processes).
Keywords: Security of finance flows continuity, Czech tax system environments, European reverse charge,
Dynamic Vector Logistics of Processes Method, Internal/external threats.
1. Introduction
The Czech tax system, in its main attributes,
coincides with the systems of developed
European countries. Tax revenues come roughly
on the same scale from direct and indirect taxes
and serve several purposes. The main and most
fundamental task is the implementation of the
state budget. The Finance Ministry of the Czech
Republic ensures the controlling activity and the
operational report on the performance of the
state budget in this area. However, it is certain
that in practice the tax collection as an important
implementation of the state budget is influenced
by a number of factors, circumstances and events
that are variable, especially depending on the
relativity of the political environment not only in
the national states, but also in the European
Union.
The main actor, without which it would not be
possible to ensure the implementation of the
state budget, is the tax business community. Also
in the area of business activity the changes and
crisis or critical situations are influenced by
external and internal factors. Ensuring the
coherence and functionality of the entire Czech
budget system, the tax assignment, the fiscal
responsibility rules, budgetary structure and
strategies is an important task, financial
management accepts various measures and
strategies in this matter. The Strategy for
Development of Financial Management
represents a long-term framework for the period
of 5-7 years, which unifies the main objectives,
priorities and activities and was elaborated in
accordance with the Strategic Framework for
Development of Public Administration of the
Czech Republic for the years 2014-2020 issued
by the Czech Ministry of the Interior, as
amended by Resolution No. 21 of 14th January
2015, where the planned projects of Czech
Ministry of Finance have been taken into
account.
The main sources of funding for different levels
of government are the tax, non-tax and capital
revenues and transfers. Tax collection and
reallocation according to statutory budgeting are
provided by the Financial Administration of the
Czech Republic. Act No. 323/2002 Coll., on
budgetary structure, specifies individual types of
taxes, Act No. 243/2000 Coll., on Tax
Assignment sets out a system for tax
redistribution among individual levels of public
budgets (state, municipalities and regions). The
reallocation of tax revenues is still a current and
discussed topic. The last amendment Act No.
260/2017 Coll., which amended Act No.
243/2000 Coll., on Tax Assignment, of 19th July
2017, came into force on 1st January 2018.
Security Continuous Financial Flow
Management in the Czech Republic, as well as in
other European Community countries, forms the
common basis of the flow of finance that flows
2 Olga Burianova and Jiri F. Urbanek
into the budget of the European Union. Finance
and security go hand in hand, since any measure
at any level aims at least to diversify risks and
thus to eliminate threats that could jeopardize the
principles of the funding system. Safeguarding is
also very closely related to building a system of
security continuity information. Factors that can
become a threat in real time and under certain
conditions need to be continuously monitored,
identified, audited, analyzed, evaluated,
investigated, and subsequently eliminated. The
aim of this paper is to outline the key logistic tax
flows in the Czech Republic, to highlight the
significant financial flow and the threat to some
entities, which in real time can negatively affect
its financing cycle in the Czech tax system and
in the European Union environment.
2. Data and Research Methodology
The basis for determining the methodology to
meet the objectives set out in this article is to
link qualitative and quantitative research. For the
purposes of this paper, the method DYVELOP ©
/dynamic vector logistics will be used, in a static
image and live in PowerPoint with structured
real time, environments and entities. This way, it
will be possible to clearly see selected financial
flows from the tax agenda, which contribute
mainly to complex financing in the Czech
Republic, in individual process logistic systems
with the capture of sources and financing
objectives. The advantage of this method is the
fact that it is possible to express not only the ties
between individual entities in different
environments but also their relationships. This
article describes the basics of the priority
financial flows in the Czech Republic. The
DYVELOP © method can process a "case"
entity that will be used in further scientific
research when financial flows and their
relationships will be analyzed and critical or
crisis areas that negatively affect financial flows
will be identified. „The DYVELOP method uses
the following special terminology for the
purposes of this article: The Entity is all that
exists or what can only be imagined in human
consciousness on any scene. Dominance is the
dominant aspect of the scene. Domains = real
time - t and environment - ENV are dominant
entities that are absolutely independent of the
controlling of human consciousness.
Environment (ENV) is the first entity species
that has the role of the main domain of any scene
that defines the implementation framework
(field) of the abstract superclass [UML] without
a defined controlling actor. The processor (PrS),
the second entity species, fulfilling the role of
transformation of inputs into emerging new
things (products), is the object in the role of the
structural thing, the regulation of which is
performed by an external controlling actor from
a defined environment. We model five types of
PrS. The case (the CASE) is the third entity
species that performs the role of a complex
situational arrangement of procedural entities,
performing under certain circumstances and
conditions the desired purpose or action
according to its internal controlling actor from
whose perspective the initiated and compound.
Urbanek (2013). This method can help clarify
important financial logistic tax flows and
determine the current critical or crisis interface.
For the chosen issue of tax financial flows, the
potential of modelling trends using time series
will be used. The basis for the elaboration of this
article is the statistical data on the value added
tax granted in 2005 to 2017 published on the
website of the Ministry of Finance of the Czech
Republic.
3. Structure of the Model
The basic syntactic descriptions and semantic
relations of all model entities are given in the
following Semitic Entity Table. This table has
three columns, and its rows list all the important
information, roles and characteristics that are
listed in the following entity model.
Table 1. Entities table
Classifier
Name of the
entity
Semantics
Entities
role
Remarks and
Decorations
Characteristics,
properties, symptoms,
system features, quantity,
quality, measurement
units, specifications,
ornaments …
ENV
Financing
System
in the Czech
Republic
Financing
System
in the
Czech
Republic
individual
environments and
entities
ENV
Financial
Administrative
Financial
Administra-
tion of the
Czech
Republic
General Directorate
of Finance,
Specialized Tax Office
Financial Authorities,
Territorial
Departments of Tax
Offices; Appealing
Financial Directorate
ENV State
Budget
State
Budget
Act no. 336/2018
Coll., on the Czech
Republic State Budget
for the year 2019,
dated 19th December
2018
ENV
Transnational
EU Budget
Transnatio-
nal EU
Budget
part of the system
budgets public of the
Czech Republic
Dynamic Model of the Finance Flows Secure Continuity into European Value Added Tax
Environments Paper for ESREL 2019 3
ENV Out-of-
Budget
System State
and
Government
Agency Funds
Extra-
budgetary
Funds
state funds,
government agencies
funds, etc.
ENV
Municipalities
Budgets of
Municipali-
ties
ENV Extra-
budgetary
Funds -
Municipal
Level
Extra-
budgetary
Funds,
Municipal
Level
decentralization (fiscal
federalism)
ENV Regions
Regional
Authorities
ENV Extra-
budgetary
Funds -
Regional
Level
Extra-
budgetary
Funds
Regional
Level
decentralization (fiscal
federalism)
Symbol
of the
Logistics
Process
System
from source to target,
acting on a defined ENV;
the symbol has the shape
of a pentagon with sharp
corners, the controlling
actor is the interface line
dividing the logistic flow
into two qualitatively
different doses from the
source to the target, the
doses may have the nature
of the flow of material,
information, money,
PrS Financial
Flow I.
Tax
Revenue
of the State
Budget,
Act no.
243/2000
Coll., on
Tax
Assignment
Gross National
Income:67,5 % of the
Value Added Tax
(VAT), 67,5 % income
tax - special,
withholding tax, 67,5
% corporate income
tax, 66,0 % natural
person income tax
from employment,
40,0 % personal
income tax and from
the rest 60%, the part
67,5 %,
PrS Financial
Flow II.
Tax
Receipts
of
Individual
Regions'
Budgets,
Section 3
(1)
Act no.
243/2000
Coll., on
Tax
Assignment
Gross National
Income: 8,92 % of the
Value Added Tax
(VAT), 8,92 % income
tax-special,
withholding tax,8,92
% corporate income
tax, 8,92 % natural
person income tax
from employment,
8,92 % personal
income tax from the
rest 60%,
100,00 % corporate
income tax paid by
regions,
PrS Financial
Flow III.
Tax
Revenue of
Municipali-
ties
Budgets,
Section 4
(1)
Act no.
243/2000
Coll.,
on Tax
Assignment
Gross National
Income: 23,58 % of
the Value Added Tax
(VAT), 23,58 %
income tax - special,
withholding tax,
23,58 % corporate
income tax, 23,58 % +
1,50 % natural person
income tax from
employment, 23,58 %
personal income tax
from the rest 60%,
100,00 % corporate
income tax paid by
municipalities,
100,00 % immovable
property tax
PrS Financial
Flow IV.
Tax
Revenues
of the State
Fund for
Transport
Infrastructure
Section 5
(1)
Act No.
243/2000
Coll., on
Tax
Assignment
100,00 % gross
national income tax on
road, 9,10 % of the
gross national income
tax from mineral oils.
PrS Financial
Flow V.
Payments
to the
European
Union
Budget
Own resources based
on VALUE ADDED
TAX: a uniform rate
of 0.3 % is levied on
the harmonized VAT
base of each Member
State. Traditional own
resources: CONSIST
MAINLY OF
CUSTOMS DUTIES
on imports from
outside the EU and
sugar levies. EU
Member States keep
20 % of the amounts
as collection costs.
Contributions to
VALUE ADDED
TAX and GROSS
NATIONAL
PRODUCT from the
national budgets of the
Member States:
monthly, usually 1/12
in the EU budget per
Member State,
following a call from
the European
Commission (call for
funds). European
Commission (2019
4 Olga Burianova and Jiri F. Urbanek
Defined entities that are related to the
fundamental tax financial flows in the Czech
Republic environment can now be represented
graphically, by creating a model map of vital
logistic financial flows in the Czech Republic.
The model is specific and advantageous for its
clarity and easy orientation. Act No. 323/2002
Coll., on the budget structure, specifies
individual types of taxes, however other
legislative standards decide in which budget the
tax revenues flow. Act No. 243/2000 Coll., on
Tax Assignment, establishes a system according
to which the tax revenues are allocated among
individual levels of public budgets (state,
municipalities and regions). The tax assignment
law is undergoing constant changes, as the
reallocation of tax revenue is still a topical and
discussed topic. The last amendment to Act No.
260/2017 Coll., Which amended Act No.
243/2000 Coll., on Tax Assignment, as amended
of 19th July 2017, came into force on January
1st, 2018. If the funds selected for taxes are
divided among several levels of public budgets
(between the state budget, regions and
municipalities), they are shared income, on the
contrary, the revenue is exclusive if the recipient
of funds is only one level of public budgets. The
yield of shared taxes according to budget
allocation is redistributed vertically between
individual levels of public budgets and
horizontally, i.e. within one level of the public
budget. Tax revenues of municipalities include
value added tax, corporation tax, personal
income tax, real estate tax, gambling tax and
other local and administrative fees.
Fig. 1. Dynamic modelling of funding processes in Czech tax
system environments
A closer analysis of the entity table and
individual financial logistics flows (marked with
the symbol of the PrS Financial Flow process
logic from I to V), the individual environments
on the model map and the characteristics of the
individual entities show that in the financial flow
logistic process marked PrS I, PrS II, PrS III and
influencing the financial flow PrS V is value
added tax. At the same time, the financial flows
marked with the symbol PrS I to PrS III are
among the internal territorial flows, the flow PrS
V can be named as an intra-communitary
financial flow. For the security search of the
crisis interface, the tax financial flow in the
Czech Republic will be defined by the symbol of
the PrS V logistic process system from the point
of view of value added tax.
3.1 Value Added Tax /PrS V/
The EU's own resources:
Own resources based on VALUE ADDED TAX:
a uniform rate of 0.3 % is levied on the
harmonized VAT base of each Member State.
Traditional own resources: CONSIST MAINLY
OF CUSTOMS DUTIES on imports from
outside the EU and sugar levies. EU Member
States keep 20 % of the amounts as collection
costs. Contributions to VALUE ADDED TAX
and GROSS NATIONAL PRODUCT from the
national budgets of the Member States: monthly,
usually 1/12 in the EU budget per Member State,
following a call from the European Commission
(call for funds). The share of the Czech
Republic's contribution to the EU budget in the
years 2014-2018 was CZK 28 214,34 million in
the value added tax in this period. The
importance of correctly selecting the value added
tax is thus unquestionable. European
Commission (2019).
Eventuality, how to find the direction, means,
and which factors to choose to meet the partial
goal of this paper can be set out in various ways.
The Value Added Tax Act No. 235/2004 Coll.,
As amended, refers to the term "economic
activity". Economic activity is a factor that
influences inputs and outputs in value added tax
and is causative and, in some cases, the result of
anomalies in tax collection. Economic activity,
as a non-incidental activity, is related to the
classification of economic activities (CZ-NACE
sections) by the branch of NACE and is further
described in the Communication of the Czech
Statistical Office of 18th September 2007 on the
introduction of the Classification of Economic
Activities. For the purposes of further analysis,
publicly available sets of tax statistics were
published on the website of the Ministry of
Finance of the Czech Republic. Financial
Administrative (2019). Overview of the taxable
amount in Czech crowns according to the
granted tax in CZK and the number of submitted
tax returns, broken down by economic activity
groups (CZ - NACE sections). Czech Statistical
Office (2019).
Dynamic Model of the Finance Flows Secure Continuity into European Value Added Tax
Environments Paper for ESREL 2019 5
3.2 Modelling the Trend
The model can be seen as the main trend of long-
term development of values of the analyzed
indicator over time. The trend may be increasing,
falling or constant. Hindls and Hronova and
Seger (2004). One of the important tasks of
statistical analyses of economic phenomena is to
study their dynamics. Empirical observations in
the economic field are often arranged in a time
series. An economic time series is a series of
values of a certain matter-of-fact and
spatially-defined indicator that is organized in
time from past to present. The time series so
defined is written as yt, t = 1,…, T. Arlt and
Arltova and Rublikova (2004). In the case of
time series of value added tax for the years
2005 - 2017 for n < 40 exponential alignments
will be selected using statistical software to find
the optimal equalization value and the result
using the lowest RMSE (Residual Sum of
Squares). The software STATGRAPHICS
Centurion, version 18. 1. 09 (64-bit), will be
used to create the models. Trend analysis in
STATGRAPHICS will be done using trending
and Forecasting applications using the Brown's
Quadratic Exp. Smoothing method. The weight
system is in the case of Brown models of
exponential alignment created by an
"equalization constant" with the symbol „α“. The
value „α“ applies: 0 < α < 1. If the equalization
constant is close to number 1, it is possible to
talk about "sharp" changes in the time series
behavior, or some of their components. In this
case, the most recent data are assigned the
largest weight. If the equalizing constant is close
to 0, then the characteristic is accompanied by
only "gradual" changes. Kristof (2006).
Aggregate criteria for comparing different
models, the smaller the value of a given
criterion, the more suitable the model for use:
MAPE – Mean Absolute Percentage Error (1),
ME –Mean Error (2), MSE –Mean Squared Error
(3), MAE –Mean Absolute Error (4), MPE –
Mean Percentage Error (5), yt – actual values, yt,
- predicted values, n – number of time series
data.
The first created model relates to the sum of the
value added tax granted for all sections of the
branch industry between 2005 and 2017. As an
optimal model, the prediction model was
selected: Brown's quadratic exp. the smoothing
with the most appropriate equalization constant
according to the criteria chosen for the selection,
the coefficient α = 0,5521, the value ranges
between 0 and 1, approaching slightly to figure
1, the time series of value added tax granted for
the years 2005-2017, and with a view to 2029 it
is possible to predict rather "sharp changes. “The
calculated values show a growing trend. The
suitability of the trend model selection is verified
by graphical analysis of the residual
autocorrelation function, see Fig. 2. Residual
analysis based on the sampling autocorrelation
function, the quadratic trend is confirmed
because all autocorrelation coefficients are
statistically insignificant at 5% significance
level. Thus, it can be deduced from the graph
that the component of the quadratic trend is
correlatively independent of the 5% level of
significance because the autocorrelation
coefficients do not exceed the 95% confidence
interval.
Fig.2 Forecast Plot for “Granted Value Added Tax „of the
quadratic trend in the period 2005 – 2029 Processing: own
Fig. 3. Trend model validation - graphical analysis of residual
autocorrelation function Processing: own
Forecast Plot for "GRANTED VALUE ADDED TAX"
Forecast Plot for PRIZNANA DAN Z PRIDANE HODNOTY
Brown's quadratic ex p. smoothing with alpha = 0,5521
2010 2014 2018 2022 2026 2030
ROK
-0,5
0
0,5
1
1,5
2
(X 1,E9)
PRIZNANA DAN Z PRIDANE HODNOTY
actual
forecast
95,0% limits
Granted Value Added Tax
Brown's quadratic ex p. smoothing with alpha = 0,5521
0 1 2 3 4 5
lag
-1
-0,6
-0,2
0,2
0,6
1
Autocorrelations
Residual Autocorrelations for adjusted GRANTED VALUE ADDED TAX
6 Olga Burianova and Jiri F. Urbanek
Tab. 2. Forecast Table for “GRANTED TAX - VALUE
ADDET TAX” , Model: Brown's quadratic exp. smoothing
with alpha = 0,5521
Lower 95%
Upper 95%
Period
Forecast
Limit
Limit
2018,0
3,95403E8
3,59135E8
4,31672E8
2019,0
4,17392E8
3,47221E8
4,87564E8
2020,0
4,41144E8
3,24451E8
5,57837E8
2021,0
4,66659E8
2,90094E8
6,43224E8
2022,0
4,93936E8
2,43305E8
7,44568E8
2023,0
5,22977E8
1,83242E8
8,62712E8
2024,0
5,5378E8
1,09087E8
9,98473E8
2025,0
5,86347E8
2,00559E7
1,15264E9
2026,0
6,20676E8
-8,46086E7
1,32596E9
2027,0
6,56768E8
-2,05633E8
1,51917E9
2028,0
6,94623E8
-3,4372E8
1,73297E9
2029,0
7,34241E8
-4,99546E8
1,96803E9
In this work, other possible factors, such as
fluctuations that may be caused by an economic
crisis or other event, have not been taken into
account. It is based only on value added data.
Table 3 and 4 contains a selected section of the
CZ-NACE division with a growing and
decreasing trend.
Trend models using Brown's quadratic exp.
smoothing for each section will help to
approximate the trend in value-added tax
developments using the calculated values and to
indicate possible interfaces that could lead to
critical or crisis situations.
Table 3. Division of Sectoral Sections – Decreasing Trend
Sectors
according to CZ-
NACE
with negative
prediction
(decreasing
trend)
Model
Type /
constant α
Interval
reliability
Section A -
Agriculture,
Forestry and
Fisheries
Brown's
quadratic
exp.
smoothing/
α = 0,0104
95,0 %
Section C -
Manufacturing
Brown's
quadratic
exp.
smoothing/
α = 0,8733
95,0 %
Section F -
Construction
Brown's
quadratic
exp.
smoothing/
α = 0,2444
95,0 %
Table 4. Division of Sectoral Sections – Increasing
Sectors
according to CZ-
NACE with
positive
prediction
(increasing
trend)
Model Type
/
constant α
Interval
reliability
Section G -
Wholesale and
Retail; Repair
and Maintenance
of Motor
Vehicles
Brown's
quadratic
exp.
smoothing/
α = 0,3285
95,0 %
Section I -
Accommodation,
Catering and
Hospitality
Brown's
quadratic
exp.
smoothing/
α = 0,3154
95,0 %
Section M -
Professional,
Scientific and
Technical
Activities
Brown's
quadratic
exp.
smoothing/
α = 0,8393
95,0 %
Section N -
Administrative
and Support
Activities
Brown's
quadratic
exp.
smoothing/
α = 0,3280
95,0 %
Section O -
Public
Administration
and Defense;
Compulsory
Social Security
Brown's
quadratic
exp.
smoothing/
α = 0,2273
95,0 %
Section P -
Education
Brown's
quadratic
exp.
smoothing/
α = 0,2263
95,0 %
section R -
Cultural,
Entertainment
and Leisure
Activities
Brown's
quadratic
exp.
smoothing/
α = 0,3063
95,0 %
Data on value added tax for the years 2005-2017
and quantified predictions can be deduced and
confirm that the Czech economy is
predominantly a service sector. In the
manufacturing sector, from the point of view of
the added value tax, the predominant decline is
predicted, while services, wholesale and retail
predict growth. The Section G – Wholesale and
Retail; Repair and Maintenance of division
Motor Vehicles and Section C – Manufacturing
are very important sectors for the economics of
the Czech Republic.
Dynamic Model of the Finance Flows Secure Continuity into European Value Added Tax
Environments Paper for ESREL 2019 7
Fig.4 Forecast Plot for “Granted Value Added Tax „of the
quadratic trend in the period 2005 – 2029 Processing: own
Fig. 5. Trend model validation - graphical analysis of residual
autocorrelation function Processing: own
Fig. 6 Forecast Plot for “Granted Value Added Tax”of the
quadratic trend in the period 2005 – 2029 Processing own
Fig. 7. Trend model validation - graphical analysis of residual
autocorrelation function Processing: own
Table 5. Section G - Wholesale and Retail; Repair and
Maintenance of Motor Vehicles, Model: Brown's quadratic
exp. smoothing with alpha = 0,3285
Period
Data
Forecast
Residual
2010,0
1,2792E8
1,23891E8
4,02918E6
2011,0
1,35881E8
1,30736E8
5,14422E6
2012,0
1,44782E8
1,40507E8
4,27461E6
2013,0
1,53419E8
1,51752E8
1,66713E6
2014,0
1,68618E8
1,62658E8
5,95987E6
2015,0
1,65229E8
1,79333E8
-1,41042E7
2016,0
1,69261E8
1,79223E8
-9,96226E6
2017,0
1,72623E8
1,79898E8
-7,27529E6
Lower 95%
Upper 95%
Period
Forecast
Limit
Limit
2018,0
1,80765E8
1,5903E8
2,025E8
2019,0
1,86863E8
1,56348E8
2,17379E8
2020,0
1,9312E8
1,51395E8
2,34844E8
2021,0
1,99534E8
1,44254E8
2,54815E8
2022,0
2,06107E8
1,34927E8
2,77287E8
2023,0
2,12839E8
1,2338E8
3,02297E8
2024,0
2,19728E8
1,09555E8
3,29901E8
2025,0
2,26776E8
9,33882E7
3,60164E8
Table 6. Section C – Manufacturing, Model: Brown's
quadratic exp. smoothing with alpha = 0,8733
Period
Data
Forecast
Residual
2010,0
1,65697E7
2,13388E7
-4,76904E6
2011,0
9,25164E6
3,63181E6
5,61983E6
2012,0
-5,58744E6
-886480,
-4,70096E6
2013,0
-1,77216E6
-2,58804E7
2,41082E7
2014,0
1,79675E7
1,12961E7
6,67136E6
2015,0
3,28073E7
5,22663E7
-1,94591E7
2016,0
4,47642E7
5,04157E7
-5,65159E6
2017,0
5,11496E7
5,50357E7
-3,88604E6
Lower 95%
Upper 95%
Period
Forecast
Limit
Limit
2018,0
5,32082E7
3,44769E7
7,19395E7
2019,0
5,07642E7
-1,76337E6
1,03292E8
2020,0
4,38255E7
-6,20537E7
1,49705E8
2021,0
3,23921E7
-1,48982E8
2,13767E8
2022,0
1,64641E7
-2,64876E8
2,97804E8
2023,0
-3,95862E6
-4,11863E8
4,03946E8
2024,0
-2,8876E7
-5,91919E8
5,34167E8
2025,0
-5,82881E7
-8,06892E8
6,90316E8
The Czech Republic has a small open economy
with an export-oriented industry. Manufacturing
is influenced by a number of factors, such as the
need for investment, government support
schemes, raw material prices, etc. Industry
accounts for about one third of gross domestic
product, which is practically the most of the EU
member states. In 2018, the Ministry of Industry
and Trade of the Czech Republic published
‘Panorama of the Manufacturing Industry of the
Czech Republic 2017’, which states, among
other things: ‘Economic profit is the largest
financial indicator. The economic profit of the
manufacturing industry was in good
development. It was unsatisfactory between 2008
and 2009, reaching almost zero in 2010 and
2011. The turning point came in 2012, when
economic profit rose above zero, ie
manufacturing companies started to create value
for their owners. In 2013, it was still very close
Forecast Plot for Section G - W holesale and Retail; Repair a nd Maintenance of division Motor Vehicles
Forecast Plot for G - velkoobchod a maloobchod
Brown's quadratic ex p. smoothing with alpha = 0,3285
2010 2014 2018 2022 2026 2030
Rok
0
1
2
3
4
5
6
(X 1,E8)
G - velkoobchod a maloobchod
actual
forecast
95,0% limits
Section G - Wholesale and Retail; Repair and Maintenance.....
Residual Autocorrelations for adjusted G - vel koobchod a maloobchod
Brown's quadratic ex p. smoothing with alpha = 0,3285
0 1 2 3 4 5
lag
-1
-0,6
-0,2
0,2
0,6
1
Autocorrelations
Section G - Whol esale and Reta il; Repair and Maintenance of Motor Vehicles
Residual Autocorrelations for adjusted C - ZPRACOVATELSKÝ PRUMYSL
Brown's quadratic ex p. smoothing with alpha = 0,8733
0 1 2 3 4 5
lag
-1
-0,6
-0,2
0,2
0,6
1
Autocorrelations
Residual Autocorrelations for adjusted Se ction C - Manufacturing
Forecast Plot for Section C - Ma nufacturing
Forecast Plot for C - ZPRACOVATELSKÝ PRUMYSL
Brown's quadratic ex p. smoothing with alpha = 0,8733
2010 2014 2018 2022 2026 2030
ROK
-21
-11
-1
9
19
(X 1,E8)
C - ZPRACOVATELSKÝ PRUMYSL
actual
forecast
95,0% limits
Section C - Manufacturing
8 Olga Burianova and Jiri F. Urbanek
to zero. In 2014, its radical growth occurred,
which continued in 2015. In 2016, it decreased,
which continued in 2017.’According to the data
of the Czech Statistical Office, there was a
decrease in the industrial production, as of 6th
February 2019 the year on year production in
industry dropped by -1.4% on 31st December
2018. (Czech Statistical Office, 2019). The
economic profit affects the tax collection in
individual member states of the European Union.
According to the data from the Ministry of Trade
and Industry of the Czech Republic, the
‘Industry 4.0 Initiative’ was formulated in 2016
and at the beginning of 2017, ‘Alliance
Company 4.0’ was established in the Czech law.
Its goal is the ‘Action Plan for Company 4.0’.
The aim of the ‘Industry 4.0 Initiative’ is to show
trends and outline measures that could be
supported by the Czech Republic's economic and
industrial base. With this phenomenon and a
prerequisite for the successful expansion of new
technology and digital platforms, fundamental
technological changes can be expected by 2020.
MINISTRY OF INDUSTRY AND TRADE
(2018).
Conclusion
The secondary sector includes sections of the
manufacturing industry which, according to
Brown's triple exponential model, show a
decreasing trend based on the value added tax
return, the equalization constant (α = 0,8733),
i.e. approaching number 1. Here you can predict
changes in time series behavior as "sharp".
Branches by CZ-NACE sections with increasing
trend are mainly services, while a significant
section, in terms of value added tax, is Section G
- Wholesale and Retail; repair and maintenance
of motor vehicles, equalizing a constant α =
0,3285. Here, the time series behavior can be
predicted as "gradual". The aim of this work was
to identify the important financial flow on the
model map and identify the interfaces that may
influence this flow in the future. The prediction
of the granted tax resulted from a single
indicator, the payer of the voluntarily granted
value added tax in the years 2005-2017. As a
result, it was verified that the CZ-NACE
branches had different trends from the point of
view of the granted tax. Interestingly, from the
point of view of the Czech Republic, the
processing industry and wholesale and retail
trade, where the individual results, are of the
opposite nature. Manufacturing is one of the key
sources of gross national income generation in
advanced economies. Is it possible to predict the
development of economic sectors using tax
revenue? Sufficient economic profit is a
prerequisite for tax collection. And with the
verification of other factors it can be concluded
that the legal conditions for the collection of
value added tax in the Czech Republic reflect the
economic development of individual sectors. Tax
fraud fluctuations are minimized by measures.
The Ministry of Industry and Trade responds to
changes in the development of economic profit
by introducing these measures. At present and in
the near future it is primarily the so-called
‘Industry 4.0’ plan. The European Union needs
to be seen as a whole, and success will therefore
be influenced by the real economic situation of
the main trading partners among the EU member
states.
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