Czech Prime Minister Bohuslav Sobotka said on Tuesday that his government will resign over allegations of corruption directed at his finance minister.
Finance Minister Andrej Babis is accused of having avoided paying taxes in the past and failing to properly explain the use of legal loopholes to issue tax-free bonds.
"I will shortly present my resignation to President Milos Zeman. It is unacceptable for Andrej Babis to stay on as finance minister," said Sobotka.
The move reflects tensions in the ruling coalition about six months before the parliamentary election.
Babis, the country's second-richest businessman, heads a centrist movement that is a favourite to win October's ballot, paving the way for him to become prime minister.
Sobotka's Social Democrats are forecast to come in at a distant second.
Tensions between the two factions have long plagued their coalition government.
Last year, Babis threatened to pull his movement out of the coalition over law proposed by a deputy from the Social Democrat party that aimed at limiting politicians' ownership in private companies.
The ban would have also prevented government officials from media ownership.
Babis owns Agrofert Group, an umbrella organisation for more than 200 companies spanning chemicals, farming, food and media.
The outgoing prime minister has also had differences with the Czech president. In June 2016, President Zeman joked that one way of getting rid of Sobotka would be to shoot him.
Sobotka hit back at Zeman's remark, saying that the Czech Republic is "with the highest probability the only country in a civilised world where the president publicly calls for killing the prime minister."