Croatia’s corporate tax rate is among highest in Europe.
All parties in their election manifestos always promise numerous changes related to tax policies. While in previous years everybody tried to lure voters with promises about lower VAT rate, now the greater emphasis is on income taxes, primarily on an increase of the non-taxable part of salary, which would mean an increase of wages. Of course, in order for someone to enjoy the privilege of higher wages, they first need to be employed, reports Večernji List on August 17, 2017.
Therefore, parties have also turned towards improving the entrepreneurial climate. All parties which have already presented their economic manifestos, with the exception of SDP, promise lower corporate tax rates. The largest reduction is offered by Pametno party, from 20 percent to 15 percent, with MOST following with 17 percent, and HDZ with 18 percent. Analysts believe that measures to encourage entrepreneurship, including lower taxes, are absolutely necessary, since Croatia needs to start developing much faster in order to decrease its lag behind other EU countries.
Growth and development can only be brought about by business entrepreneurs and new investments. Entrepreneur Branko Roglić welcomes lower corporate tax rates, but also comments that this is actually “a tax on nothing”, since currently a large number of businesses do not have profits which could be taxed. “Lower tax rate is good, but we need to implement other measures, such as reducing business fiscal charges and implementing comprehensive reforms which would facilitate doing business”, says Roglić.
“Reduction of corporate taxes is certainly welcome because at present rate we are not particularly competitive. But, businesses are not burdened only by one tax, but by a number of other taxes and fiscal charges. Also, it is clear that a sustainable lowering of the tax burden cannot be implemented without reforms that would allow for a more efficient use of budgetary funds”, says Davor Majetić, the CEO of the Croatian Employers’ Association.
“The problem is that in Croatia entrepreneurs are always seen in a negative light, as people who want to cheat. It is essential that such impression is changed”, says economic analyst Damir Novotny. HDZ last year said that the Tax Administration should be an adviser to entrepreneurs, and not a institution that will just write fines. MOST and Pametno also have similar goals in their manifestos.
Since data show that Croatia is among the least developed member states of the European Union, it is clear to the political parties that they have to offer citizens something sustainable. And economic growth and new jobs can only be provided with good entrepreneurial climate.
