VAT Rate to Be Cut to 24%, Prime Minister Promises

Total Croatia News

ZAGREB, June 15, 2018 – Prime Minister Andrej Plenković said on Friday work was underway on a tax reform in which cutting VAT by one percentage point would not be the only measure, but one of a set that wouldn’t put budget revenues at risk.

Speaking at the 13th Croatian Exporters conference, he congratulated the recipients of the Golden Key award, saying it was a big success for them and part of the contribution to Croatian exports in 2017, which went up 14% annually to more than 14 billion kuna. “These are very encouraging and great results, and I am confident that you will continue to work along those lines on your output, your business plans, your skills and know-how, in order to be present on the global market,” said Plenković.

He said that, unlike the time before 2008, when the main driver of growth was excessive domestic demand, Croatia’s economy was now growing on sound foundations. “The rise of exports is one of the most important components of that growth, and we know that export-oriented societies create added value, jobs and competitive products.”

In order to additionally improve the conditions of doing business, the government’s policy will focus on a more favourable, safer and more predictable business environment, on entrepreneurial technological and innovative ability in order to raise the quality of exports, and on an efficient public administration and justice system, Plenković said.

He announced that the tax reform would be ready in the autumn and would enter into force next year. He said that, in line with the election programme, the government would cut VAT by 1 pp.

“But that won’t be the only measure. It will be part of measures which won’t endanger the budget’s revenues side. On the contrary, we believe that the combination of measures will also facilitate better revenues, reducing the fiscal pressure on both taxpayers and enterprises. All the measures will make Croatian exporters more competitive. That is why, in the coming period, we will see what we can do about the burden on salaries.”

Plenković said he was not referring only to income tax, recalling that now that is local government revenue and that local government units were extremely pleased with that. “That is why we will see which other aspects we can make realistically in order to relieve employers, resulting in higher net income for our citizens and employees.”

Commenting on the law on emergency administration in the indebted Agrokor conglomerate, he said it had given many companies within the conglomerate time for consolidation before a settlement was reached. “Looking at it from the aspect of state interests, the fundamental goal has been achieved: Croatia’s economy and financial system didn’t experience a disaster.”


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