As Poslovni Dnevnik writes on the 26th of January, 2019, the low rate of taxation and the simplistic way of ”doing the books” has apparently led to a large increase in people setting up obrts and freelancing in Croatia. Minister Zdravko Marić announced that the Croatian Finance Ministry will “consider this segment in particular and see how it will be treated in the future”.
Judging by the discussions that took place at the 2nd Tax Conference, the next round of tax changes could be concentrated primarily on obrt owners and other freelancers, with the possibility of further lowering the tax burden on wages.
Minister of Finance Zdravko Marić announced that the Croatian Finance Ministry intends to alter a few things for Croatia’s numerous freelancers, but didn’t really specify in what direction those changes will go and when these changes will happen. It is to be expected, however, that the Croatian Finance Ministry will prepare the changes during the course of this year, according to a report from prviplan.hr.
At the Taxation Conference, organised by the Faculty of Economics in Zagreb and Deloitte, and was attended by representatives of the scientific and business community, representatives of the Croatian Finance Ministry and the Tax Administration, Minister Marić reported on the effects of the previous changes in the Croatian tax system.
Minister Marić reported that about 150,000 taxpayers in Croatia are paying tax on their earnings.
He said there are about 35,000 j.d.o.o’s, 106,000 registered self-employed businesses, including 37,000 obrt owners. When it comes to private renters who pay a flat tax, there are about 95,000.
Commenting on the rapid growth in the number of obrts paying taxes on a flat-rate basis, Minister Marić said that the Croatian Finance Ministry has made a big step forward and simplified the management of the books, but that “this segment needs to be considered and it should be seen how things will look in the future.”
Marić’s announcement came after the introduction made by dr.sc. Hrvoje Šimović from the Faculty of Economics in Zagreb, who said that the growth of those paying flat tax now looks good, especially because of encouraging levels of those who are self-employed.
“But in the future, obrts will prove to be the biggest problem in regard to the tax aspect. The potential for abuse will increase due to taxpayers’ efforts to make sure their net income remains as much as possible,” said Šimović.
Minister Marić emphasised that the Croatian tax system needs to be fully understood and that the essence of tax reform is to make the system simpler, more predictable and consistent, offering a better sense of understanding and security for everyone.
“We’re doing the same for all taxpayers. It’s not true that we’re only good for those who pay a lot of tax, and that we’re purposely trying to make it more difficult for those who pay less. It’s precisely in the segment of small and medium-sized entrepreneurs that the biggest reform has been made in the first round of [tax] reforms. The profit tax rate has dropped from 20 to 18 percent, or 12 percent for companies with up to three million kuna of revenue. A lot has been facilitated,” Marić noted.
He stressed that he remains a big advocate for tax cuts.
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