As Darko Bicak/Poslovni Dnevnik writes on the 3rd of May, 2020, given the fact that the COVID-19 crisis has shaken the global, and consequently Croatian society, and the economic damage that the pandemic will cause when everything is ”totalled up” is still unknown, public calls are being made in Croatia for the abolition of a series of state, public and local institutions and fiscal and especially para-fiscal levies. Many Croatian companies are seeing an opportunity in the midst of the crisis.
While certain people think that now is the time to change the territorial structure of the country with one stroke of a proverbial brush overnight, abolish a number of chambers and agencies and to reduce, delay or ultimately abolish many fees, it’s more realistically clear that this will not happen either quickly or go smoothly, and most of these things cannot simply just be abolished after having been in function, be that a good thing or a bad thing, for such a long time.
One of the most controversial para-fiscal levies is the one paid for the care of Croatian forests, which has long been being paid by business owners in Croatia. A few years ago, the new Forest Law stipulated that SMEs would no longer have to pay this fee. In particular, when the law was passed in mid-2018, of the previous 202,162 taxpayers, 181,794 of them were exempted from paying these fees.
But what is this actually all about? From Croatian Forests, they warn of the dangers that abolishing this fee entirely could have on the safety and functioning of the entire economy, as well as society. Krunoslav Jakupcic, President of the Board of Croatian Forests, pointed out that we’re witnessing many wanting this fee, along with other fees paid by Croatian companies, to be abolished.
He explained that 30 percent of the funds raised through this ”forest fee” goes to mine clearance in forested areas.
“We’re sorry to see this [fee] classified as a ”para-fiscal levy” at all, it would be more correct to say that it is one of the few fees for which its purpose of use is actually specified by law. The abolition of compensation for the generally beneficial function of Croatian forests would have unprecedented consequences for the karst forests, which are threatened by fires and the other catastrophic consequences of accelerated climate change,” warned Jakupcic.
He specified that 37 percent of the money raised from this fee goes specifically to karst forest management (in Dalmatia, Primorje, and Istria) which don’t have an economic role in terms of timber production, but play an invaluable role in terms of oxygen production, carbon sequestration, tourism, recreation and much more.
30 percent of the collected funds from this fee paid by certain Croatian companies goes to the demining actions in forested areas, and 20 percent is pumped into preparations for fighting fires during the warmer months and implementing protection in time for the the fire season. Forest owners see 12 percent of the collected funds, and a mere (and truly symbolic) 1 percent of that same money goes to the scientific research work of the Forestry Institute and the Forestry Faculty.
One issue that is often raised is the fact that 37 percent of the money raised through this ”forest fee” goes to Croatia’s karst forests that have no actual economic role.
”Past amendments to the Forestry Act have worked to offset the cost of small Croatian companies, exempting as many as 90 percent of Croatian business owners from having to pay this particular fee. Therefore, the fee is currently paid exclusively by Croatian companies with annual revenues in excess of 3 million kuna, amounting to only 0.0265 percent of total revenues.
For example, if a company has revenue of three million kuna, the annual amount of compensation is 795 kuna, while a company with revenues of 10 million kuna pays a compensation of 2650 kuna per year, in four installments,” explained Jakupcic, adding that the funds raised through the implementation of this fee help to achieve immeasurable benefits in terms of demining and protecting forests from fires, which is of great importance for both tourism and health and encourages employment in Croatia’s numerous rural, karst regions.
For more on Croatian companies, follow our business page.
