Sunday, 8 May 2022

Croatia Annually Loses €173m to Illegal Trade in Cigarettes and Tobacco

ZAGREB, 8 May 2022 - Croatia lost HRK 1.3 billion (€173m) in budget revenues to the consumption of illegal cigarettes and cut tobacco in 2021, a survey conducted by the Croatian Employers' Association (HUP) in cooperation with the Ipsos market research agency shows.

The purpose of the survey was to determine the size of the untaxed tobacco market and its impact on the national economy. It was carried out in December 2021 and January 2022 on a representative sample of 1,243 households including 3,062 respondents aged 19 and above.

The survey showed that 27.9% of the population aged 19 and above smoke, with 21.4% of them smoking cigarettes and 7.5 % cut tobacco. In the last three years, despite the rise in prices of tobacco products, this incidence has remained stable.

"According to the survey, the share of untaxed tobacco products is 19% on an annual level and this mostly accounts for untaxed cut tobacco," HUP chief economist Iva Tomić said, adding that higher prices are pushing people to buy unstamped tobacco products.

"Although this trend has been decreasing since 2019, a relatively high level of illegal products is still present, which has considerable economic and social implications, for budget revenues, the rise in crime, public health services, the decline in jobs and so on," Tomić said.

In 2021, revenues from excise tax and VAT on tobacco products amounted to nearly HRK 8 billion, or 8 per cent of total tax revenues. However, due to the consumption of untaxed tobacco products the government loses HRK 1.3 billion annually.

Tomić said that state institutions were making considerable efforts in combating the illegal trade in tobacco products, introducing a product traceability system, increasing seizures of such products, limiting the import of tobacco products from non-EU countries to two packets per person, and imposing restrictions on raw tobacco.

"A good regulatory and tax environment is crucial for business stability and is in the interest of all tobacco market participants," Tomić said.

(€1 = HRK 7.5)

For more, check out our business section.

Wednesday, 4 May 2022

Finance Minister: Structural Reforms Precondition for Reducing Health, Pension Contributions

ZAGREB, 4 May 2022 - Finance Minister Zdravko Marić said on Wednesday that employers' proposal to further reduce the tax burden on labour are taken into account in principle but that additional discussions and analyses are required, while reducing contributions requires structural reforms in the health and pensions systems.

The Croatian Employers Association (HUP) said on Tuesday that attracting and keeping quality labour required a more significant reduction of overall labour costs so that employers could pay higher salaries to workers, proposing short-term proposals for an increase in net wages, which should happen relatively soon.

"It is necessary to significantly reduce the total cost of labour, including by increasing non-taxable income to HRK 5,000, reducing the lower income tax rate by 5 pp, from 20% to 15%, and keeping the higher income tax rate at 30% but raising the threshold for its application, from the current HRK 30,000 to 50,000", HUP said.

As for contributions, HUP called for reducing the contribution to the first pension pillar by 2 pp, from 15 to 13%, reducing the health insurance contribution by 1.5 pp, from 16.5 to 15%, and limiting the highest amount of payments for pensions and health insurance to four average monthly wages.

HUP also proposed a further increase in non-taxable payments to workers, notably considering that that does not mean additional costs for the state while creating more room for employers to compensate workers.

HUP advocates increasing the non-taxable amount for rewards from HRK 3,000 to HRK 6,000 and rewards for work performance from HRK 5,000 to HRK 12,000. It also advocates the introduction of non-taxable income for work from home, increasing the non-taxable amount for severance pay and retirement from HRK 8,000 to HRK 15,000 as well as increasing the allowance for the use of private vehicles for business purposes from HRK 2 to HRK 3 per kilometre.

Marić said that at present, at least two-thirds of taxpayers did not pay income tax since in previous rounds of tax reform tax breaks were introduced and basic tax relief was increased.

The principle of proportionality of taxation could be further discussed, he said, recalling other tax changes, including the exemption of young people from income tax, which this year will result in 146,000 young workers receiving HRK 640 million in tax return.

He said that he government had worked a lot on income tax, noting that the scope of nontaxable income had been expanded.

"Further reducing the tax burden, of which I am in favour, requires, among other things, paying special attention to health and pension insurance contributions," Marić said but noted that due to the situation in the health and pension sectors, creating preconditions for further reducing the tax burden on labour would require structural changes in the two sectors.

For more, make sure to check out our dedicated politics section.

Thursday, 24 March 2022

9,500 Ukrainians Find Refuge In Croatia So Far

ZAGREB, 24 March - About 9,500 Ukrainians displaced by the war in their country have found refuge in Croatia, Tomislav Marević of the Civil Protection Directorate said on Thursday.

"These are still mainly women and children, and many of them are accommodated privately," Marević said in an interview with Croatian Radio.

He said he was proud that Croatia had responded in solidarity already in the first weeks of the war and that citizens were taking in displaced persons voluntarily.

He commended the government's decision to finance accommodation for refugees, adding that the Civil Protection Directorate would sign a contract with each user and owner of a property.

Anny Brusić, director of the association of small and medium-sized enterprises at the Croatian Employers' Association (HUP), said that the business community was very interested in hiring Ukrainian refugees.

"We need a little more time to get the system going because certain procedures need to be simplified before hiring actually begins. A state authority should say that at this point Ukrainian workers are not required to show a certificate of education or a diploma. Our legislation is rather rigid," Brusić said.


Politics: For more, check out our politics section.

Tuesday, 8 March 2022

HUP: Women Still Under Represented in Commerce

ZAGREB, 8 March 2022 - Despite greater employability and more women in leading positions they are still insufficiently represented in the economy, particularly at the highest levels which indicates that there are still significant legal, structural and cultural obstacles to their full equality, it was heard at a conference on Tuesday.

The conference  - An economy without prejudice strengthening the economy by empowering women - was organised on the occasion of International Women's Day by the Croatian Employers' Association (HUP) and International Network of Business Women.

The status of women in Croatian society hasn't changed drastically despite a lot of stakeholders being included in changing the mood and awareness, Milka Kosanović from HUP said. She said that women are still paid less than men, with women earning 84% to 87% of the pay of their male colleagues for the same job. Today 79% of girls enrol in higher education and 49% gain higher qualifications.

"When they start climbing up the career ladder, women are faced with something we know as the glass ceiling. They don't advance equally with men and certain positions are not accessible to them and they are paid 13% to 16% less for similar jobs," said Kosanović.

It is necessary to systematically work on changing the mindset of women too. Women need to be aware that they can do everything men can and society needs to live by the principles it advocates," she added.

Gordana Matković, the owner of the Educamix for the development of human potential and a member of the International Network of Business Women said that more than 100 years have passed since the start of the struggle for equal rights, however, even today we are talking about the inequality of women.

That is why in fact the network organised today's conference to motivate society to think about ways of improving the status of women.

Congratulating women on the occasion of International Women's Day HUP Director-General Damir Zorić said that things can always be better. He added that he was glad that women have recognised HUP as a possible platform where they can act and improve things.

Friday, 3 September 2021

Legislation to Be Amended to Regulate Teleworking

ZAGREB, 3 Sept 2021 - The process of amending the Labour Act to regulate teleworking will be initiated before the end of this year, and the amended legislation should be passed no later than August 2022, a conference on remote work was told in Split on Friday.

The conference was held within the Devote programme, which is being implemented by the Croatian Employers' Association (HUP) in cooperation with the Oil Industry Union (SING) and the Confederation of Norwegian Enterprise (NHO).

"It is our duty to adjust our legislation, including the Labour Act, to the European Union's 2019 directives, and deadlines expire in August 2022," said Josipa Klišanin of the Croatian Labour Ministry.

The EU directives will have the greatest impact on contracts on teleworking enabling employees to choose their place of work in agreement with their employer, according to Klišanin.

It is a worker's workload and performance that matters and not the place where they perform their duties, she underscored.

The future amendments will introduce the protection of teleworkers, and labour inspectors will be able to visit them only if they announce their visit and have the substantive reason  for such a visit, she said.

The HUP director-general, Damir Zorić, said that the amendments should produce better regulation of remote work.

HUP's chief economist Iva Tomić said that on average, 3% of employed Croatians were teleworkers, however, during the COVID-19 pandemic this percentage had risen by 30%.

 Surveys show that an estimated 100 million people will soon be teleworking worldwide.

For more on politics, CLICK HERE.

Friday, 27 August 2021

HUP: Croatia Formally Exits Recession

ZAGREB, 27 Aug 2021 - The latest GDP data for the second quarter of 2021 show that Croatia formally exited recession after four consecutive quarters of downturn, the Croatian Employers' Association (HUP) chief economist Iva Tomić said on Friday.

Croatia's economy grew by 16.1% in the second quarter of 2021 compared to Q2 2020, which is the first time it grew after going down for four consecutive quarters and at the highest rate since 1996, when the national statistical office started collecting those data.

Tomić underscored that this growth rate placed Croatia among the best performers in the European Union considering the 2021 Q2 GDP.

Croatia, Spain, France, Hungary, Italy and Portugal are together with Croatia at the top of the ranking, after those countries experienced a double-digit fall in the same period last year, Tomić said underscoring that all components in GDP had risen in Q2 compared to Q2 2020.

For more on business, CLICK HERE.

Wednesday, 2 June 2021

Associations Request Urgent Meeting With PM Andrej Plenković on Regular Public Transport

ZAGREB, 2 June, 2021 - The Croatian Employers' Association (HUP) and the SSSH trade union federation have asked Prime Minister Andrej Plenković for an urgent meeting on the regulation of regular public transport, stressing that if the meeting is not held, they "will be forced to take certain joint activities".

The answer and the date of the urgent meeting are expected by Friday, 4 June, at the latest, the associations said in a letter to the prime minister.

Employers and unionists say they have been "more than active" in proposing solutions and "more than patient" over the last three years, waiting for the final implementation of European and national regulations.

The HUP and the SSSH warn that the already ready legal solutions that were a prerequisite for signing contracts for regular public passenger transport on county and inter-county lines up to 100 kilometres are not implemented due to the inactivity of state administration bodies.

They also said that the decision had not yet been made on the distribution of funds from the state budget to counties, even though the funds, according to the SSSH and the HUP, had already been secured, and that public service contracts between counties and private transport companies involved in regular public passenger transport had not been signed yet.

"Private bus carriers from the HUP transport association account for 80% of the public transport on county and inter-county lines up to 100 kilometres and employ over 7,000 workers who are directly affected by such irresponsible behaviour of the relevant ministries," the HUP said.

Without a public service contract, the process of collective bargaining to improve working conditions in the transport sector is at a standstill and existing jobs are in jeopardy, they noted.

The operation of most public bus lines is at risk, especially in rural areas, and workers and private public transport providers haven't been able to plan their business and their companies' prospects for three years now, the HUP and the SSSH warned.

The HUP and the SSSH think that the government should make a decision on the distribution of funds from the state budget to counties (signatories of contracts with transport companies) at its next session.

They added that it was also necessary to stop discrimination against private bus carriers and their workers in relation to carriers owned by the public sector since private companies still didn't have public service contracts, while public companies did, for the same service.

They also think that it is necessary to continue with the job-retention subsidies for all companies that continue to register a decline in business and meet the prescribed criteria.

That is especially important, they said, for passenger transport on lines in rural areas, where the number of passengers is declining sharply, also because of the end of the school year and the holidays, and cannot be sustained without state support.

For more about politics in Croatia, follow TCN's dedicated page.

Friday, 28 May 2021

Croatian Employers Propose Keeping Economic Measures in Place Longer

May the 28th, 2021 - Croatian employers have proposed that the Croatian Government keep some economic measures, namely the job preservation measures introduced to try to combat the economic effects of the pandemic in 2020, in place for longer than planned.

As Poslovni Dnevnik/Ana Blaskovic writes, with the abolition of some of the country's epidemiological measures with even more relaxations to come in the foreseeable future, the Croatian Employers' Association (HUP) sent to the Minister of Finance Zdravko Maric proposals for a new set of economic measures.

The existing ones, this association of Croatian employers says, should be very carefully and only gradually rolled back in order to avoid a wave of bankruptcies and layoffs, and the introduction of several new ones are crucial in order to preserve liquidity and start an investment cycle.

“Maintaining liquidity isn't just a matter of a period of closure - it's necessary to provide liquidity to a company for a longer period of time, so that the business can start up again (and return to the point of coverage) at the moment when restrictions (work, movement) are removed,'' say this group of Croatian employers.

They noted that small and micro enterprises, which are the most numerous Croatian enterprise, are more at risk than others as measures expire and recovery is possible only with investment momentum.

"Although not all activities are equally affected by this crisis, for the sustainable growth of the overall economy, it's necessary to start up business again in all sectors. However, given the effect of the coronavirus pandemic, it's questionable to what extent companies are able to finance any new investment cycle on their own,'' the Croatian employers stated.

Although savings have increased, access to finance is limited, so support from the state in the form of additional measures and programmes is absolutely necessary, as are different types of grants and incentives to launch investments.

Aware of the jump in government indebtedness from the association of Croatian employers, they claim that the risk of a sudden relaxation of economic measures is significantly higher than additional (favourable) borrowing.

"The worst thing would be that after the introduction of all of those measures and everything we then endured following the suspension of those measures, that the affected companies remain in trouble and start firing people. Why would the owners of affected businesses have to bear the loss of revenue all on their own? They aren't any more to blame for the consequences of the pandemic than business owners who just happen to not be particularly affected by this particular crisis,'' they stated.

Therefore, in their range of requests addressed to the Minister of Finance, they propose to retain support for job preservation until companies achieve at least 90 percent of their respective pre-pandemic revenues.

"It is extremely important that the decision to get rid of certain measures to support the economy be introduced gradually, depending on the epidemiological situation, but also on the situation in a particular sector so as not to cause a wave of bankruptcies and layoffs," said the Croatian employers, supporting OECD and IMF recommendations, as well as those recommended by the EC.

They're also asking the government to continue covering part of companies' fixed costs, taking into account the percentage drop in revenues, ensuring easy access to liquidity and working capital loans with guarantee schemes for the SME segment and the possibility of converting loans into grants, continuing the moratorium until at least the end of 2021 and investing in Industry 4.0.

For large Croatian companies, they propose support for investments by increasing support in the Investment Incentives Act and additional support to companies for co-financing a project from EU funds.

Among the proposals are the possibility of compensating receivables between companies for preventing chain illiquidity, speeding up the determination of bad loans, speeding up bankruptcies and the liquidations of companies, additional (non) tax relief or their abolition, and more tax relief for investments.

"We believe that the government measures introduced as a result of the coronavirus crisis should continue as long as we have enterprises who cannot function and preserve jobs on their own without assistance measures," the association of Croatian employers concluded in their request to the Finance Ministry.

For more, follow our business section.

Tuesday, 25 May 2021

Employers Propose Continuation of Government COVID Subsidies

ZAGREB, 25 May, 2021 - The Croatian Employers' Association (HUP) has proposed measures for maintaining liquidity and launching private investments which include retaining jobkeeping measures and covering a portion of fixed costs, ensuring favourable loans and prolonging loan maturity.

In expectation of COVID measures and lockdown of businesses being lifted, HUP addressed Finance Minister Zdravko Marić and underscored that maintaining liquidity is not only relevant during the lockdown period but should be extended for a longer period, and that recovery can only be possible if investments are boosted.

HUP proposes that jobkeeping measures be extended even after busines restrictions are lifted until such time that  all enterprises generate at least 90% of their pre-pandemic revenue in 2019. HUP believes that abolishing support measures for the economy should be gradual, depending on the epidemiological situation, but also on the circumstances in each individual sector so that Croatia is not faced with a wave of bankruptcies and layoffs.

HUP also calls for a portion of fixed costs to continue to be covered, taking account of the percentage revenue has decreased, and for facilitating access to loans for liquidity and working capital, including guarantee schemes for micro, small and medium-sized enterprises.

HUP advocates possibly transforming a portion of loans into grants and for the moratorium on loan maturities to be extended for existing loans, along with state guarantees, at least until the end of this year and longer if need be, based on transparent criteria.

HUP proposes additional support loans for exporters and enterprises investing in the 4.0 industry, and support for investments by large companies through increased support for EU co-funded projects.

It also recommends the possibility of deleveraging debts between companies to prevent a chain reaction, and for non-recoverable loans to be identified faster, as well as speeding up bankruptcy procedures, and introducing additional tax cuts.

"We believe that government subsidies to cover the disrupted economic activities due to the COVID crisis should continue until such time that enterprises can do business normally and save jobs without that support," HUP said.

For more about politics in Croatia, follow TCN's dedicated page.

Thursday, 25 February 2021

Croatian Employers Association Wants EU Funds Sum Directed to Private Sector

February the 25th, 2021 - The Croatian Employers Association (HUP) want more European Union cash to be directed towards the private sector, with employers doing their best to urge the government to amend a certain document to ensure this happens.

As Novac/Gordana Grgas writes, at least 50 percent of European Union money is set to be available to Croatia in the next period, which is a total of about 24 billion euros. The Croatian Employers Association believes that around half of that massive amount should be made available to the private sector through calls for grants.

Employers are also urging the Croatian Government to properly amend the draft National Recovery and Resilience Plan (NPOO), the first version of which it has already sent to the European Commission (EC), and to further strengthen the role of the private sector in it.

Although the draft itself hasn't yet been published, and has only recently been roughly presented to the Croatian Employers Association, it appears that most of the 6 billion euros in grants from the NPOO, to be funded by the European Recovery and Resilience Mechanism as a result of the ongoing coronavirus crisis, could end up in reform-related public sector projects. As announced by the Croatian Employers Association at a recently held press conference, they plan to urgently send their remarks and suggestions to the European Commission itself. The final draft, they say, should be ready and sent to Brussels in April.

So far, a quarter of the money available to Croatia from EU funds has gone to the private sector, warned the Croatian Employers Association's Damir Zoric. The rest ended up going to public investments and public infrastructure, and Croatia needs larger investments in production for the development of the economy. Boris Drilo, President of the aforementioned associations's ICT Association explained that previous investments in the private sector have been shown to have a significant impact on economic growth.

"It's a minute until midnight for all of us, after which we can turn into either a princess or a pumpkin," he said in a rather picturesque manner. He also stressed that investments in private sector projects lead to sustainable employment for high-value jobs.

In February, the Croatian Employers Association conducted a survey among 1,700 enterprise owners, which showed that more than two thirds of them have prepared projects or investment plans for the next financial period in the amount of more than 21 billion kuna. As many as 94 percent of them would exclusively utilise EU grants, so there is extremely little interest in these so-called financial instruments, such as loans, and 30 percent say they will not be able to invest if these grants aren't enough.

On top of that, 28 percent of enterprise owners say they will not survive the ongoing pandemic crisis without better co-financing. Most of them stated that they would invest in capacity expansion and modernisation if they could be more certain, and the projects they have in those areas are the ones which are the most ready to be realised.

Drilo explained that, in general, the investment potential of available European Union money is significantly higher if it is directed to private investments, and it is also less burdensome for the state budget. Namely, a private company from the EU receives 40 to 70 percent of the investment amount as support, and the rest is financed by itself. The public sector, on the other hand, receives 85 percent of the money from the EU for the project, and the rest is added from public sources, which is less favourable.

Answering a question related to the National Recovery and Resilience Plan, the Croatian Employers Association said that the state should be prevented from competing with the private sector with its projects.

Ana Fresl, president of the Croatian Employers Association's Association of Professionals for EU Funds confirmed that the draft plan presented to them, in which only state bodies participated, exceeded the available six billion euros, and there has not been any feedback on which parts of the plan will remain and which will be discarded. In their belief, what was presented to them under the name "economy", the first version of the plan envisages a series of projects that have nothing to do with entrepreneurship whatsoever.

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