Finance Minister Comments on Demands for Lower VAT on Hospitality Services

Total Croatia News

ZAGREB, July 10, 2019 – Commenting on demands by restaurant owners for a VAT cut so that they could become more competitive, Finance Minister Zdravko Marić said on Wednesday that prices, too, were important for their competitiveness.

“If we look at VAT alone, we can see that we have higher rates on hospitality services than some other Mediterranean countries, but if we look at price competitiveness, the question is not the VAT rate but prices that we have overall,” Marić told the press after a meeting of the inner cabinet.

He said that as part of changes to the tax system a great focus was put on small and medium enterprises and that most of restaurant owners belonged to this sector.

Marić said that within the next three months his ministry would seek additional measures to improve the tax system and make it more competitive, which should provide an incentive to taxpayers and the enterprise sector.

“We will certainly discuss the VAT, but it’s too early to make any conclusions,” the minister said.

The association of restaurant owners presented a list of demands to the government on Wednesday, including a demand to cut the VAT rate on food preparation and serving from the present 25 to 13 percent.

Marić said the European Commission’s revised forecast of Croatia’s economic growth this year was a positive thing, adding that it was necessary to keep it up. “That’s a positive thing for Croatia and for everyone who wants and likes to invest in Croatia, but I think it’s important that we continue on this course that we have set, in terms of everything we can do to facilitate economic growth in Croatia,” the minister told reporters.

He said that although quarterly or annual economic growth was important, it was necessary to keep it up.

The Commission today revised its forecast of Croatia’s economic growth in 2019 to 3.1% from the previously estimated 2.6%.

Marić said the revision for Croatia was among the three biggest forecast revisions in the EU, alongside those for Hungary and Romania. He attributed Croatia’s revision to the 2.9% annual growth recorded in Q1.

He said Croatia’s key challenge with regard to economic growth was to raise the contributions of labour and productivity, given that capital was giving good results. There is enough room for progress on that front, he added.

Marić said Croatia could have better results in industrial production and some other activities.

More news about Croatia’s tax system can be found in the Business section.


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