International taxation policies are making Croatian businesses uncompetitive.
Four years after Croatia joined the European Union and in that way addressed a number of foreign trade issues with leading European countries, employers are urging the government to solve economic relations with major economies on other continents. The Croatian Employers’ Association (HUP) has sent a letter to Prime Minister Andrej Plenković, the Ministry of Foreign Affairs and the Ministry Finance Ministries, with an initiative to conclude double taxation avoidance treaties with eight countries. The list includes the United States, Australia, New Zealand, Brazil, United Arab Emirates, Saudi Arabia, Singapore and Hong Kong, reports Večernji List on August 28, 2017.
Davor Majetić, the CEO of HUP, wrote to Finance Minister Zdravko Marić that Croatian companies which export their products and services to the eight countries do so under financially worse conditions than competing companies from other nations.
“The business conditions for our businesses in countries with which we have not signed such agreements make them, compared to companies from countries which have concluded such treaties, much less competitive due to additional costs,” says the HUP’s chief executive.
To the eight markets mentioned by the HUP, Croatian entrepreneurs last year exported goods in the amount of 5.35 billion kunas. This figure does not include the export of services, which is also growing.
The initiative itself was first started by the ICT branch of the HUP. IT companies are the most vulnerable to factors affecting their global competitiveness and, according to data from CISEx, an association which gathers software exporters, the Croatian IT industry last year exported goods and services in the amount of 2.41 billion kunas, with a growth of 12.8 percent.
For the first time, the industry broke the one-billion-euro barrier in total revenues, with an increase of 10.4 percent, and it opened 1,341 new jobs. Similarly to IT industries in other countries, the most important foreign market for Croatian companies is the United States. Croatia is the only NATO member which does not have a signed double taxation avoidance treaty with the US.
A survey conducted among companies has shown that, due to the double taxation issue, the amount received by them relative to the value of the services performed can be decreased by as much as 40 percent. Considering that Croatia has one of the largest tax burdens in the EU, it is easy to see why it is hard to be competitive in relation with companies from, for example, Romania.
Translated from Večernji List.
