Orlen Unipetrol slams Czech windfall tax on oil refineries

Czechia's only oil refiner — Orlen Unipetrol, which operates refineries in Litvínov and Kralupy nad Vltavou — has criticized the windfall tax on oil refiners introduced by Andrej Babiš's government. According to the company's leadership, the new levy may violate the constitutional principles of legal certainty and the ban on retroactive legislation.

A tax on higher margins

A week ago, the government decided to introduce a special tax on oil refineries that will apply this year and next. It will target refiners' increased margin compared with 2025. Andrej Babiš's cabinet (ANO) justifies the sector-specific tax by pointing to a rise in refinery margins caused by disruptions on the global oil market.

Constitutionality concerns

According to the company's own analysis, the government's bill in its current form raises serious doubts about its compliance with the constitutional order. “The tax is being proposed only at the end of the year, whose economic results are then supposed to serve retroactively as the basis for calculating it. This fundamentally changes the economic and tax conditions after investment, trade and operational decisions have already been made,” said Orlen Unipetrol CEO and chairman of the board Mariusz Wnuk. According to him, this approach may run counter to the principle of legal certainty and the ban on retroactive law — basic principles of a democratic state governed by the rule of law. Moreover, he said, the tax hits just one company in an unsystematic way and sets a precedent that could affect other businesses in a similar situation in the future.

A threat to investment, and record losses

According to Wnuk, the money the company will have to hand over to the state will be missing when it comes to planning investment in refinery modernization. “Every billion paid out as the windfall tax is money that won't be available for modernizing the plants, ensuring production safety and decarbonization,” he stressed, adding that such investments are essential to meet the EU's strict environmental requirements and to keep the company competitive. On top of that, margin revenue is also needed to fund the company's current operations.

Wnuk also noted that the company does not funnel its earnings abroad: since acquiring a 100% stake in Orlen Unipetrol in 2018, parent group Orlen has not received a single dividend from it. At the same time, the company itself has recently posted substantial losses: last year's net loss came to almost 6 billion crowns, and after adjustments it rose to a record of almost 47 billion crowns. The year before, the company's net loss reached 16 billion crowns.

Around Prague, based on reporting by novinky.cz