ZAGREB, November 9, 2018 – The 2019 budget proposal which Finance Minister Zdravko Marić delivered at a government meeting on Friday envisages higher budget allocations for all ministries except for the Tourism Ministry, the funds of which will go down by 16.8%.
Expressed in absolute numbers, the biggest winner is the Finance Ministry as its allocation will increase by nearly 7.5 billion kuna from its allocation in the original 2018 budget, and in 2019 it will rise by 21.8% to 41.9 billion kuna.
Expressed in the percentage, the State Assets Ministry’s allocation will increase the most, by 47.5% to 108.7 million kuna.
The office of the government can count on 424.5 million kuna in 2019, which is 19.7% more than its budget allocation in the 2018 budget.
The 2019 draft budget envisages funds for the Office of the Croatian President in the amount of 37.7 million, down by 1.1%, and the budget allocation for the Parliament will be reduced by 9.9% to 168 million kuna.
The budget revenues planned for 2019 are expected to amount to 136.1 billion kuna, up 5.5% in comparison to the 2018 budget.
The budget expenditures are projected at kuna 140.3 billion, 6.9 billion more than in the original budget for 2018.
VAT on OTC drugs to be lowered to 5%, tax-free bonus amount to rise to 7,500 kuna
The government on Friday sent to the parliament a set of nine final bills on taxation envisaging amendments to the Value Added Tax legislation, including a lower, 5% rate on prescription drugs as well as on over-the-counter drugs, and a rise in the tax-free amount of annual bonuses for employees from 2,500 kuna to 7,500 kuna.
The final set of draft laws envisages that all medicines, including prescription and OTC drugs, should be taxed by a 5% rate, Finance Minister Zdravko Marić said, recalling that currently the tax rate for prescription medicines is 5% and for other drugs 25%.
The VAT rate on the services of writers, composers and artists and the related copyrights is to be lowered from the standard 25% rate to 13%.
The same reduction can be expected regarding the VAT on fresh meat and fish, fruit, vegetables, eggs, live cattle delivery and nappies.
Marić said that those were the most important items of the consumer’s basket.
Also, the legislative changes envisage a threefold increase in tax-free annual bonuses to employees such as Christmas and Easter bonuses, holiday allowances and extra monthly wage. Thus the non-taxable amount of the bonuses will be set at 7,500 kuna.
Prime Minister Andrej Plenković described that as good news. “I think that this is what many employers had hinted at when it comes to tax changes,” he said about the changes that are to take effect on 1 December.
For more on taxes in Croatia, click here.