ZAGREB, July 26, 2018 – The American Chamber of Commerce in Croatia (AmCham) on Wednesday said that it strongly supported the idea of further tax breaks in the Croatian economy, underscoring that tax reliefs would in the short-term positively impact competitiveness and would retain the labour force.
AmCham said in a press release that a clear, predictable and stable taxation system and partner cooperation between tax authorities and the business community was the key for the economy to function. AmCham added that “further measures in administrative reliefs in the sphere of the taxation system would contribute to significant savings in company time and resources which would then have more time to deal with their core business.”
AmCham said that his year, Croatia marks five years of membership of the EU, adding that with regard to the economy, it was important to emphasise two related facts – a significant number of Croatia’s active labour force is leaving to work in competitive markets while at the same time, Croatia is recording an economic growth accompanied by a growing demand for workers.
That has impacted the imbalance between supply and demand on the labour market which is why it is urgent to secure a stimulating taxation framework that would enable keeping existing workers but also to attract new workers and additional investments. Croatia is uncompetitive with regard to tax burdens on labour, particularly in the higher salaries bracket.
That is one of the reasons why a large number of propulsive sectors in Croatia have a problem with a lack of personnel which is particularly visible in the ICT industry and tourism, AmCham underscored.
AmCham believes that raising the ceiling on salaries in the 24% tax bracket would have a positive impact on attracting investors and would increase the inflow of investments with consideration of the cost of labour in Croatia.
Current taxation of shareholder plans discourages opening regional branches in Croatia and hampers keeping highly qualified staff and does not act as a stimulant for the development of young technological companies in which offering company shares to workers is usual practice, AmCham underlined.
AmCham considers that shareholder plans or revenue based on employee participation in programmes offering shares to their employees should be treated the same as revenue that employees receive from private investments on the financial market (e.g. taxing income from dividend and capital gains).
In Croatia, income tax and contributions for compulsory insurance for participation in this type of programme are five to six times higher on average in Croatia than in Hungary or Slovakia for example, AmCham stressed.
“Croatia’s economy is not growing fast enough compared to other countries in central and eastern Europe. Tax reliefs on labour would in the short-term positively impact competitiveness and retaining the labour force,” said AmCham’s director Andrea Doko Jelušić.
