Finance Minster Ready to Consider Changes to Tax Plans

By 22 August 2018

ZAGREB, August 22, 2018 - The government does not wish to additionally tax entrepreneurs and all criticisms of amendments to several tax laws can be analysed at the government and in parliament after the ongoing public consultation, Finance Minister Zdravko Marić said on Tuesday.

Asked by the press if, following entrepreneurs' heated reactions to announcements that the base for calculating wage contributions for management board chairpersons and members would be increased, this plan was scrapped, Marić said a public consultation was under way, that such reactions were a result of it and that the government would consider them.

The Finance Ministry has put to public consultation, among others, a proposal to increase from 0.65 to 1.1 the base for calculating the pension and health contributions on the average gross salary of management board chairpersons and members, which has been strongly criticised by entrepreneurs.

"There have been many comments, some perhaps a little strong, but we are considering them all and will find the best solution," Marić said, adding that the government and his ministry had shown they "can listen."

As for the plan to raise the contributions base for directors and board members, which small and medium enterprises take most issue with, he recalled that the government had cut profit tax and introduced the calculation of profit tax on amounts collected and not accounts receivable. "Our idea from the beginning has been to stimulate and encourage enterprise and I'm sorry if, perhaps in some things, one gets the impression that this is some sort of counterblow. Not at all."

Asked if the ruling coalition partners thought like that as well, Marić said they did and that the biggest change in the tax reform would be the reduction of VAT on fresh meat, fish, fruit and vegetables. The reduction of contributions for employment and safety at work is another big change, he added.

"It's not our intention to cause any additional burden on enterprises, notably small and medium ones," Marić said.

Asked if he was willing to scrap the contentious changes, he reiterated that the public consultation was under way until September 6, to be followed by a government discussion and two parliamentary readings. There will be plenty of time for a well-argued discussion so the changes as part of the tax reform's third round can go into force on January 1, 2019, he said.

He estimated that the tax relief of the reform begun at the start of 2017 was 6 billion kuna.