ZAGREB, November 30, 2018 – The government on Friday endorsed a regulation to increase excise tax on cigarettes that will raise the price of cigarettes in Croatia by two kuna a pack, and on vehicles in an effort to prevent a possible price hike on cars following the introduction of new EU measures on exhaust fumes.
Presenting the excise tax on cigarettes state secretary in the Finance Ministry Zdravko Zrinušić said that the price of a packet of cigarettes should not increase more than two kuna.
The regulation aligns the minimum excise duties on cigarettes with EU Directive 2011/64/EU which requires Member States to levy a minimum rate of excise duties on cigarettes. This minimum rate must consist of: a specific component of between 7.5% and 76.5% of the total tax burden (TTB) – expressed as a fixed amount per 1000 cigarettes.
The regulation determines that the excise duty be increased from 310 kuna to 335 kuna for 1000 cigarettes while the proportional duty will remain at 34% of the retail price. The regulation enters into force on December 3
Additional reduction in value components on vehicle tax proposed
The government also endorsed a regulation regarding a special vehicle tax that will enter into force as of 1 January.
Zrinušić explained that the regulation will reduce the burden of the value component of the vehicle tax and introduces an excise duty on CO2 emissions per kilometre.
That means reducing the value component in order to reduce the tax burden on vehicles. A reduction of 6.8% is planned in the first phase or about 97 million kuna, and if the trend of vehicle purchases continues as it is now that could mean a reduction of 350 million kuna in tax breaks, Zrinušić explained.
The regulation means that the value component of vehicle tax would be reduced from 4,500 kuna to 3,500 kuna for vehicles valued by between 200,000 kuna and 250,000 kuna.
Vehicles classified as category 1 and 2 with a value up to 150,000 kuna will still not be required to pay the value component while the third category of vehicles valued between 150,000 to 200,000 kuna would remain at the current 2,000 kuna.
In early October, Finance Minister Zdravko Marić announced that he would try and buffer any possible price hike on the cost of vehicles due to the new way exhaust fumes are measured as set by the EU.
For more on taxes in Croatia, click here.
