ZAGREB, September 22, 2020 – Prime Minister Andrej Plenkovic on Tuesday said that developing a reliable and stable legal framework and predictable fiscal framework had a key role in achieving a strong Croatia economy-wise.
“That is essential to have a stimulating business environment, production, investments and employment,” Plenkovic said opening a conference organised by the Vecernji List daily and Podravka food manufacturer on tax policy in the function of boosting competitiveness of Croatia’s economy.
The state needs to develop a system without legal and fiscal unknowns for entrepreneurs and that means a passable system and each new wave of tax reforms starts on the first day of the year, said Plenkovic.
He underscored that during the term of his cabinet more than HRK 9 billion had been released through tax cuts and currently 1.9 million citizens are exempt from income taxes which is twice as many as at the start of the first term of the government under his premiership.
The average wage has increased by HRK 1,150, which is five times more than in the period between 2011 and 2015, he recalled.
For the purpose of boosting purchasing power of households. VAT has been halved for basic food items and certain commodities and the non-taxable income has been increased, the premier said.
Continuation of tax cuts
Plenkovic underlined that tax cuts would continue in 2021, which would include reducing income taxes brackets: from 36% to 30% and from 24% to 20%, while profit tax for small enterprises from 12% to 10%.
During this term VAT on all food will be reduced from 25% to 13% but circumstances for that are still not ripe. Taxation of real estate transactions will be abolished too but not necessarily on 1 January 2021, he added.
All VAT tax payers will be able to choose whether they will pay it after an invoice has been paid, he added and digitisation will continue for tax and administration procedures.
Plenkovic underlined that a desirable Croatia for its residents is a country that is safe, resilient to crises, with macro-economic stability and a country with solved transitional problems.
Plenkovic underscored that the government is focused on four points, strengthening economic sovereignty which comprehends self-sufficiency in production and increased exports.
About €1billion to save jobs until end of year
Plenkovic said that the fight against Covid-19 showed how important and inevitable the state’s role was because only it can ensure the necessary support with financial support schemes and on the other hand ensure financial stability of public finances.
Plenkovic underscored that as a result of the government measures, Croatia has not seen a huge increase in unemployment.
To date HRK 6.3 billion has been invested in job-retention measures and has saved about 600,000 jobs in 100,000 companies, he said.
By the end of the year that amount will have risen to about €1 billion in forms of grants to the private sector, added Plenkovic.
An important factor will be in European funds that Croatia will have at its disposal in the next four to seven years, he added.
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