Monday, 30 January 2023

Croatian Government Increases Pressure on Trade Sector Regarding VAT

January the 30th, 2023 - The Croatian Government is stepping up its game in putting the pressure on stores and good and service providers. Many have allegedly unjustifiably increased their prices following Eurozone accession, and now they're receiving rather unpleasant questionnaires about their price lists and VAT.

As Poslovni Dnevnik/Josipa Ban writes, the state (with considerable delay, might I add) is now asking retailers and others providing goods and services to provide it with information on their item prices before and after the reduction of the VAT rate back in April last year. They say they need that information for their analytics.

On February the 6th this year, yhe addresses of as many as 30,000 retailers will receive a query in which they'll have to justify whether they increased, decreased or froze the prices of certain items on sale in their stores after the state lowered the general VAT rate for some products at the beginning of April 2022 (at 5 and 13 percent). This was announced by Finance Minister Marko Primorac at the Tax Conference held at the Faculty of Economics in Zagreb recently.

"The goal is not to punish them, but this will be part of the analytical basis for the subsequent assessment of the effects of the regulations so that we can enact better tax regulations and rates in the future. We're going to monitor what the prices were before the reduction of the VAT rate, just before the reduction, the day after the reduction of the VAT rate and the day when the next price change occurred," explained Primorac.

The form that traders will receive through the ePorezna (eTax) system will have to be filled out and submitted by February the 22nd, 2023. This form, unlike the one requested from the largest retailers by Davor Filipovic, Minister of Economy, due to doubts about price increases after the introduction of the euro, will not be optional. Enterprises will have to fill it in and send it back, otherwise they will face misdemeanor fines.

With this, at least as Primorac has claimed, the Croatian Government wants to obtain analytical confirmation of what is already widely known among Croats, namely that the reduction of tax rates is usually not felt by customers, that is, products don't actually end up becoming cheaper despite the tax reduction.

However, the timing of sending such a questionnaire to traders is interesting, so one cannot avoid the impression that this is a kind of pressure being put on them because most of them didn't agree to be on the so-called "white lists" of the Ministry of Economy and Sustainable Development, which were supposed to enable the comparability of price movements.

As it seems, however, they don't currently have an instrument with which they could force traders to submit their price data before and after the introduction of the euro, so the Ministry of Finance decided to use the VAT change from April last year to put them in the hot seat. Then, the VAT rate was reduced on a number of food products, such as meat, eggs, fish, oil, butter... down to five percent, while natural gas, firewood, briquettes, wood chips, heating from thermal cells were reduced to a slightly higher thirteen percent.

The fact that this is the first time that the Croatian Government has used questionnaires to check whether prices have been lowered or not after lowering the VAT rate also supports the suspicion that it is a form of backhanded pressure on traders. It's also known that tax relief was implemented on several occasions, and there was never a systematic check of its effect.

In addition to this news, Primorac also announced that they're currently working on changes to improve the efficiency of tax debt collection. They, as he explained, often end up in the statute of limitations, so the changes will establish new finance departments at the Administrative Courts, which will be dedicated to tax debts. Amendments to the Court Registry Act, which are also underway, will prevent those with debts from opening new businesses.

On top of all of that, he announced, the creation of a platform for comparing taxes in EU member states is now being considered. The goal is to dispel misconceptions that the income tax in Croatia is too high. "Income tax in Croatia stands at 28 percent, while the EU average is currently 38 percent. The story about the excessive tax burden on labour just doesn't hold much water. We have to demystify that," said Primorac.

For more, make sure to check out our news section.

Tuesday, 27 September 2022

Association of Pag Cheese Producers Seeks Lowering of VAT

September the 27th, 2022 - The Association of Pag cheese producers are seeking VAT reductions on cheese and milk products from the government, given the fact that Croatia has placed particularly high VAT rates on cheese compared to many EU member states.

As Morski writes, in Italy, this rate stands at 4%, in France 5.5%, in Germany 7%, while in this country, VAT on cheese is a whopping 25%. That is why Pag cheese producers and small dairy farms have sent a request to the Croatian Government in which they're asking for a reduction in what they consider to be too high value-added tax rates. If that happens, the consumption of cheese would increase, and its price for the end consumer would also be lower.

Without tax relief, the business outlook for cheesemakers doesn't look great.

''The Association of Pag Cheese Producers, together with the Association of Croatian Small Dairies, has decided to initiate a request to reduce VAT on cheese and dairy products. Croatia has the highest VAT rate on cheese and dairy products of all EU member states. Just for comparison, in Slovenia, the VAT rate is 9.5%, in Italy and Spain it is 4%, in Ireland the VAT rate is 0%,'' said Martina Pernar Skunca, president of the Pag Cheese Producers Association.

''We propose a VAT rate of 0-5%, so we also accept 5% as a kind of normal VAT rate for dairy products,'' said Sime Gligora, the director of the Gligora cheese factory.

''What's illogical is that the VAT on milk is 5% and the state subsidises milk production and encourages it, while on the other hand, the VAT on cheese and dairy products is so high,'' added Pernar Skunca.

I'm tired of the barren bureaucracy, of all of these piles of paper. Most of this could be reduced, simplified, arranged to be simpler, to be easier. A big problem is created by VAT, which takes most of the income for itself. It's clear to all of us that the state also has to live on something and those institutions that are also at our service, don't get us wrong, but I think that this industry should be protected not only on the island of Pag, but across the whole of Croatia because it's now on the verge of extinction,'' said Sime Pernjak, the co-owner of a cheese factory.

This summer's drought has also left unfavourable consequences. The sheep which graze Pag did not find enough food, so the livestock had to be supplemented, and compared to last year, the costs have doubled.

''From the very start when it comes to livestock, feed prices rose. Fodder rose because artificial fertiliser rose. Fertilizer prices have risen due to energy costs. And therefore the price of milk has also shot up. So, the price of milk is 50% higher than it was last year. Energy prices went up, electricity is three times more expensive, gas is twice as expensive, and the costs of packaging, cardboard, foils all went up,'' said Gligora.

It can't get any worse, Pag cheese producers have warned, aware that they cannot replace the increase in input costs with a higher price of cheese.

''The big thing is that we buy milk with 5% VAT, and the output VAT is 25%. The maths here is crystal clear,'' said Pernjak.

''By reducing the VAT rate on cheese and dairy products, our products would be more competitive on the market, their consumption would increase, and this would be good for everyone because there would be a greater inflow into the state coffers. So we believe that in these difficult conditions on the market and in this situation when everything has become more expensive - both raw materials and energy products - that it is really necessary to reduce VAT because it is the highest in all of Europe. As for Pag cheese, it is a premium product, and the point is that dairy farmers on the island of Pag don't live only on Pag cheese. We also have goats, we buy significant quantities of cow's milk from Croatia and goat's milk which also comes from Croatia. The price of hard cheeses has increased. We've minimally increased our prices. All hard cheeses are more expensive products and you simply have to make a compromise so as not to lose customers. Up to a certain point you can suffer at the expense of your own margins, but then there comes a point where you can't do that. If the dairies aren't operating well, who will pay the farmers for milk but the dairies?'' added Pernar Skunca.

''We bring in milk from Lika, Zagorje, Slavonia, Istria...'' noted Pernjak.

''What is very important is that we're the biggest purchasers of cow's, goat's and sheep's milk and, unlike other dairies, we produce the most products that have this high VAT,'' added Pernar Skunca. That's why only with a lower VAT rate can we overcome this never-worse time for cheesemakers, they explained from the Association of Pag Cheese Producers - now they are already worried about their jobs but also the preservation of the centuries-old tradition of cheesemaking on the island, writes HRT.

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

Friday, 25 March 2022

Croatia Reduces Value Added Tax Rate on a Series of Products

ZAGREB, 25 March  (2022) - The Croatian parliament on Friday adopted the amendments to the Value Added Tax (VAT) Act unanimously with 123 votes in an effort to buffer the price hikes.

Under the amended law, the standard VAT rate of 25% is lowered to 13% on children's food, edible oils and fats, butter and margarine, live animals, fresh meat and small goods, live and fresh fish, crabs, vegetables, fruit, eggs, seedlings and seeds, fertiliser and pesticides, animal fodder and tickets for concerts, sports and cultural events.

The reduced 13% VAT is also imposed on natural gas, heating from heating stations, firewood, pellets, briquettes and cuttings as well as menstrual products.

VAT on natural gas will additionally be temporarily reduced to 5% for the period from 1 April to 31 March 2023.

The Sabor also adopted the Law on Settlements which improves and harmonises the way boundaries between settlements are determined and how the names of settlements, streets, squares and house numbers are to be marked.

The national legislature adopted a Law on State Measurements and the Cadastre which abolishes the majority of real costs for the use of data from excerpts, printouts, transcripts and certificates.

A bill on the consolidation of farmland will receive a second reading. The bill aims at implementing the consolidation of land by 2026 and HRK 313 million has been earmarked for this purpose.

 For more, check out our politics section.

Thursday, 17 March 2022

Opposition Says VAT Cuts Welcome, but Late

ZAGREB, 17 March 2022 - The government's proposal to cut VAT on food and gas is welcome but late and insufficient, the parliamentary opposition said on Thursday, while the ruling HDZ said the cut was timely and that it would help citizens weather the price rises.

"The government's proposal is going in the right direction, but the fact is that it's late and it's not enough," Social Democratic Party president Peđa Grbin said ahead of a debate on amendments to the VAT Act whereby the government wishes to buffer the energy price hikes and protect living standards and the economy.

Grbin said the government should introduce other measures, too, and asked what it was doing to ensure incentives for enterprises so they could work in these crisis times.

Marijan Pavliček of the Sovereignists said they mostly agreed with the government's measures but asked why the amendments to the VAT Act did not go into force on 1 March.

"This blow is unbearable and the government should have reacted much sooner and much stronger," Nikola Grmoja of Bridge said, calling on the government to further cut excises on fuel.

Stephen Bartulica of the Homeland Movement said this was too little too late and that the government reacted only when it absolutely had to.

Marin Lertoić of the Istrian Democratic Party said they supported any relief of households and businesses.

Grozdana Perić of the HDZ said these amendments would help citizens weather the energy price hikes and that over the past six years the government had found solutions to crises and stabilised public finance.

The opposition fears that the VAT cuts on key foodstuffs and gas will not result in lower food prices.

Davor Bernardić of the Social Democrats said that when VAT was cut in 2018, food became more expensive.

He said foreign retail chains would have discounts for a week and then prices would soar, adding that Finance Minister Zdravko Marić would be responsible for millions of kuna ending in the pockets of foreign retailers, just as it was in 2018.

The government has proposed reducing VAT from 25% and 13% to 5% on children's food, edible oils and fats, butter and margarine, live animals, fresh meat and fish, vegetables, fruit, eggs, seedlings, fertilisers and pesticides, fodder for animals, and tickets for concerts, sporting and cultural events.

The government also proposed a 13% VAT rate on natural gas supplies and heating from power stations, firewood, and menstrual products, among other things, and a 5% VAT rate on natural gas deliveries from 1 April 2022 to 31 March 2023.

The VAT cuts are estimated at HRK 2.1 billion.

For more, check out our politics section.

Monday, 14 February 2022

Croatian Government Inflation Measures: Lower VAT, Vouchers...

February the 14th, 2022 - The crisis surrounding rising energy prices across not only Croatia but the rest of Europe and indeed the world is continuing to throw proverbial spanners in the works for many and causing growing concern for companies and business. Croatian Government inflation measures are set to be rapidly introduced as a result of the spiralling situation which poses very little good for the domestic economy.

As Poslovni Dnevnik writes, at some point in the middle of next week, new Croatian Government inflation measures aimed at maintaining the standards of the country's residents due to high inflation, will be introduced. The move will now be being anticipated by many as the situation continues to unfold in a negative light.

RTL Television published the first hints about what these Croatian Government inflation measures might look like when they come into force:

Most of the measures are aimed at the most vulnerable people among us, therefore it has been announced that special vouchers to cover the difference in rising bill amounts will amount to more than 200 kuna at a time, and that they could also be extended to a larger circle of users during this inflation crisis.

The Prime Minister's Advisor for Economic Affairs, Zvonimir Savic, confirmed that there will be a reduction in the VAT rate, a topic which has been being talked about in many sectors for a very long time now. VAT on energy will be reduced, and state-owned suppliers will have to give up part of their earnings as a result of that.

However, it has not yet been decided whether these new Croatian Government inflation measures will reduce the VAT on gas down to 13 or a very welcome 5 percent.

On top of that, we do know that the tax placed on basic food products - eggs, flour, sugar, milk and the like - will be reduced from 13 to 5 percent.

For more, check out our dedicated politics section.

Friday, 30 July 2021

Finance Minister Zdravko Maric Planning to Slash VAT on Food

July the 30th, 2021 - Finance Minister Zdravko Maric has announced that he does indeed intend to slash VAT on food during a recent guest appearance on RTL Danas (Today).

As Poslovni Dnevnik writes, before we take to the subject at hand, it's worth noting that Finance Minister Zdravko Maric did not accept the proposals of the National Association of Caterers on lowering VAT on beverages and respecting labour costs as a tax deduction. Let's look at precisely why didn't he satisfy this association's wishes.

"We always end up talking about VAT somehow..." stated Maric.

"It's not just a question of satisfying or not satisfying people's desires. I mean, we always end up talking about VAT whatever the topic is. I do emphasise all the time for the hospitality sector, as well as for all other activities, this government in the past and this term, despite the pandemic, has conducted several rounds of tax relief to stimulate activities, employment, the raising of wages… Of course, in the wake of all this we're continuing to work hard, and caterers always come up with this suggestion that the only exclusive variable is VAT. One of the interlocutors in this regard was the co-owner of a restaurant. Let's just sit down and demystify a few things now. So... complete accommodation in tourism, complete food and service is already at a reduced rate. We're only talking about bars here,'' Maric said.

What would those numbers look like?

"We're talking about approximately half a billion kuna. Now, looking at the data we have from the past year, it's certain that the pandemic had a significant share in the hospitality sector, however, you know that the hospitality sector has been recognised with our measures since day one. At a time when it was horizontal for all sectors, and to this day the hospitality industry is one of the few that is the recipient of measures to preserve jobs and cover fixed costs.''

There has been a lot of talk about VAT in the last term of this government as well, it was promised that the general VAT rate would be reduced. In the end, that didn't happen. Is it a topic at all anymore?

"It isn't in the government's programme at the moment. Let me remind you, there was a reduction in the income tax rate, especially for young people, you know that it all came into force and that it has already been done. Young people can testify to that, I'd also say that they were pleasantly surprised with those tax refunds. What follows, when the conditions for that are created, is written in the government's programme that the reduction of VAT will be applied to all food in general, but we'l see when and how we'll implement it,'' stated Finance Minister Zdravko Maric.

Next came the topic of the pandemic-dominated season, and we're not just talking about tourism here. Maric was asked if he was worried about the epidemiological situation and the possible sudden end of the tourist season, to which he responded:

"I think we really do all need to contribute individually to prevent that from happening. We aren't talking only about tourism here but also all other economic activities. The third quarter is generally the strongest in terms of economic activity. Very soon our children will return to school. We really have a lot of segments that we have to take care of in order to finally gain this victory over the virus and to be able to live normally again,'' Finance Minister Zdravko Maric replied.

The European Commission has now officially adopted Croatia's National Recovery and Resilience Plan. What's the next phase? When do the first funds arrive and what will they be used for?

"At the end of August, the government will authorise the signing of a financial agreement with the EU. After that, I expect a 13 percent advance in September of somewhere around 820 million euros. By the end of the year, Croatia must meet the 34 criteria it listed in the document, which is the basis for withdrawing an additional 700 million euros in the first half of next year. By the end of 2022, we need to meet the requirements that will ensure the withdrawal of 46 percent of the total envelope of money, which is very good news because it means that at the beginning of this period, we'll be able to use the most funds,'' concluded Finance Minister Zdravko Maric.

For more, follow our politics section.

Thursday, 16 July 2020

European Countries Slash VAT for Tourist Services, Croatia Holds Off

European countries are continuing to slash the VAT on services performed in the tourist industry to try to rescue their respective economies which have been enfeebled by the ongoing coronavirus pandemic. Croatia, for whom VAT has always been a burning issue, is unsurprisingly continuing to hold off...

As Poslovni Dnevnik writes on the 15th of July, 2020, in order to at least temporarily help the tourism sector out, which is among the most devastated by the pandemic, many European countries, including Croatia's own tourism competitors, have decided to temporarily slash VAT on tourism services.

As HOTREC, the European Association of Hotels, Restaurants and Catering Facilities, announced, eleven European countries have decided to go ahead with this very welcome measure so far, among which there is no sign of Croatia, which doesn't come as much of a shock, but Croatia's tourist competitors, Greece and Turkey, are on the list.

Thus, for the period from April the 1st to November the 30th, 2020, Turkey decided that the VAT in the hotel segment will fall from the already low eight percent to a mere one percent, which is also the lowest VAT in any tourist segment in Europe, according to

The Greeks, on the other hand, decided to reduce the cost in the segment of serving soft drinks from 24 percent to 13 percent, and for hospitality, from 13 percent to just five percent.

Here in Croatia, tourism is currently taxed at two rates - 25 and 13 percent, of which this reduced rate was introduced only very recently, exclusively for the segment of preparation and serving of dishes and desserts outside of restaurants.

''When it comes to VAT, some progress has been made recently, but we still have one of the highest VAT rates for tourism, especially when compared to our competitors. Reducing VAT rates is a prerequisite for raising competitiveness in normal circumstances, and in these circumstances where the world is subject to a pandemic, VAT is a matter of survival,'' said Veljko Ostojic, director of the Croatian Tourism Association, urging the government to follow suit and consider doing the same as the likes of Greece and Turkey to help the sector.

For more, follow our business page.

Thursday, 25 June 2020

Croatian Hospitality Facilities Get Political on VAT

Croatian hospitality facilities, well, some of them at least, are getting a bit political in the run up to the elections. Some rather interesting and original approaches are being used and one of them is particularly clever.

The elections are rapidly approaching in Croatia and as with each and every time there is an election or indeed political event of any kind, numerous issues that have been left to linger in the background to rot get dragged back to the forefront in a flurry of pre-election promises that nobody ever truly expects to be fulfilled. VAT is one burning issue that bothers everyone, and yet nobody really wants to tackle it.

As Poslovni Dnevnik writes on the 24th of June, 2020, if you happen to find yourself sitting down to drink some coffee in Kostrena's Mosquito bar with its beautiful sea view, you will also be able to read an unusual message written by the owner of the facility at the bottom of your bill.

"PP and the highest VAT in Europe are calculated [and included] in the price. Spain and Italy 10, Hungary 5, Greece 13, and France and Slovenia 6 percent. Let's go to the polls and stop the tax repression of the state that exists in order to provide privileges for the eligible," the strong and clear message against Croatia's extortionate VAT reads.

The owner of this particular Croatian hospitality facility explained to precisely what prompted him to make such an interesting move to encourage citizens to go to the polls.

"It was simply because many people weren't aware of the facts at all. If there is the VAT level I mentioned exists in countries which rely on tourism and have a few hundred million inhabitants, how are we any different, and yet we're promoting ourselves as a tourist country? There were many people in the hospitality sector who worked while the VAT on catering services was 13 percent and also when they raised it to 25 percent, and then many put their stores up for sale because their businesses sadly became unprofitable. The government only went out to meet the hotel lobby and the restaurants managed to receive a reduction down to 13 percent VAT on food services,'' said Miro Juraj, the owner of the Mosquito bar in Kostrena.

He points out that this is his way of encouraging people to go to the polls because elections, he says, are the only place where some things can be made to change.

"Everyone who complains that coffee is too expensive for them, should know that every third employee is a state employee, that's how much money is given to the state," concluded Juraj.

For more on Croatian hospitality facilities, follow our lifestyle page.

Wednesday, 31 July 2019

Croatia's Tax on Sugary Drinks Product of Health System Desperation?

As Novac/Goranka Juresko/Zlatko Simic writes on the 30th of July, 2019, amid last week's more or less positive flood of information on various tax cuts in different sectors in Croatia, the exception to the wave of joy came in the form of the announced new tax on sugary drinks.

It was said at the time that this should have a "beneficial" impact on health, especially for kids, but also on Croatia's overall health budget, referring to the "experiences of other countries" that reached for a similar goal, although their actual results were a little muddy, to say the least.

While the actual science of course remains unquestionable, the fact remains that the current Government of Croatia still doesn't actually have a clear explanation as to why only sugars from certain carbonated juices are dangerous to health, while those from sweets, mussels, fruit yogurts and similar products apparently aren't, at least according to their logic. Why have refined sugars from other sources remained clear of the tax man's brutal scissors?

For example, a deciliter of Fanta has ten grams of sugar in it, and the same amount of fruit-based yogurt contains a massive 16 grams. Let's be real, both is too much, because proper nutritional guidelines "approves" up to 35 grams of sugar a day for a man, and for women - up to 25 grams daily. Everything else is surplus that is considered to be detrimental to health, no matter where it comes from - sugary drinks, bread, beer... In addition, this proposal is not accompanied by simulations that should show what is expected from this measure and at what time or date, nor does it talk about what effects can be expected on Croatia's relatively stretched health budget.

The Croatian Institute of Public Health, which should have been consulted before such decisions were made, said that "nobody had talked to them about it," and manufacturers say the same.

''It is true that most sugars are brought into the body come from sugary drinks, but I'm afraid that this is a decision that hasn't been prepared for and was not a logical consequence of a campaign in which citizens would get access to all the information about the dangers that come "from the plate" said Marijan Katalenić, an expert on food safety and quality.

He added that when it comes to food, any restrictions - which have proven to be a dubious decision in other countries - should reach a consensus at the EU level, and precisely on food quality.

''This is just a decision of desperate people at a moment when the health system can no longer pay for all the consequences of the bad impact of food on the health of citizens,'' concluded Katalenić.

The consumption data for energy drinks among children and adolescents is indeed worrying, however. According to a study by the European Food Safety Authority (EFSA), 68 percent of adolescents and 18 percent of children drink energy drinks.

They are the victims of advertising that convinces them that they will learn faster and become better at sports, but in reality, the consequences are obesity, diabetes and of course, the constant lining of dentists' already deep pockets with endless cases of caries. First is the intake of high amounts of sugar, which negatively affects the already significant problem of obesity. The second is the consumption of caffeine, a substance with an impact on the development of children, and something which needs to be investigated more extensively. The third is taste formation in children, that is, getting used to an extremely sweet, sugar-filled drink. The fourth is the blending of spirits and energy drinks that is popular with young people and can be very dangerous in some cases.

The above are just one part of the highlights of the conference "Better Food for Better Health", which was organised by Biljana Borzan three years ago in collaboration with the World Health Organisation (WHO).

The experiences from other countries shows that the tax burden of carbonated beverages has different effects, depending on the country and the general social status. The sugar-based tax on these products have prompted manufacturers to reduce the sugar content of their products by up to 50 percent in order to be below the taxable level.

''The measure had the greatest effect on less wealthy households, which significantly reduced the purchase of such beverages. In middle-class and better-off households, it has not had that much of an impact, and a good part of these consumers who are really determined to buy carbonated beverages have simply changed the brands they purchase,'' noted Borzan.

According to one study, out of 31 analysed countries from the EU and the region, twelve of them (Belgium, Bosnia and Herzegovina, Estonia, Finland, France, Netherlands, Ireland, Latvia, Hungary, Malta, Portugal and the United Kingdom) have a soft drink tax, whereas eighteen European countries (Austria, Bulgaria, Czech Republic, Denmark, Greece, Croatia, Italy, Cyprus, Lithuania, Luxembourg, Macedonia, Poland, Romania, Slovakia, Slovenia, Serbia, Spain and Sweden), do not have such a tax today.

What the real reasons behind Croatia's seemingly rash decision to raise taxes on sugary drinks actually are will likely continue to be speculated upon, especially as the stated reason being so vague leaves a lot of room for various conclusions, none of which are much to do with health according to the aforementioned expert.

Follow our dedicated politics and lifestyle page for much more.

Sunday, 28 July 2019

Croatia's Hoteliers Praise VAT Reductions, Speak of 10% Pay Rises

As Novac/Dora Koretic writes on the 27th of July, 2019, Croatia's hoteliers welcomed the government's recent decision to reduce VAT in the hospitality sector down to 13 percent, however, the owner of the large Bluesun group, Jako Andabak, wasn't very impressed with these latest tax reforms, to say the least.

"Well, what can I say to you, I still don't think they really understand tourism. Instead of thinking two steps in advance, they only deal with what suits them right now, instead of acting proactively. If they really wanted to help, they would have to look at the complete situation in tourism and define the VAT rate at an even lower level,'' Andabak stated bluntly, and he further criticised the measures that the Croatian Government introduced for young people who get certain tax breaks at the ages of 25 and 30.

"And what happens then when that young man, after his 25th or 30th birthday, suddenly sees his wages drop? Who will make up for that? Probably the employers...'' said Andabak, adding that the measure is a populist one, as well as the fact that in his opinion, there is absolutely no real value to it at all.

His colleagues from HUT, led by Veljko Ostojić, welcomed the latest tourism-oriented measures in their official statement, announcing immediately that the money they would get to keep through lower VAT rates would then be invested back into raising the quality of the facilities and overall offer, as well as increasing employee salaries.

"In an increasingly complex market game in the Mediterranean, the tourism sector needs to boost investment in the quality of tourism supply, because we can only compete with the environment we're in with quality. Given that the consolidated net profit of the tourism sector in Croatia is less than six percent of the total income realised, only tax relief can release the funds needed to increase investment and raise salaries,'' they said from HUT.

Tourism Minister Gari Cappelli said on Friday for Hina that hoteliers announced a salary increase of ten percent as soon as the reduced VAT rate comes into force. However, it has been stressed repeatedly that the raising of wages and leve of quality for staff lies with the employers, not with the government or its measures.

In reducing VAT on food preparation and serving, the main goal, in his words, was not cheapening the offer, but stopping the outflow of personnel and raising the overall level of quality. He recalled the research that shows that 30 percent of tourists visiting Croatia come for the country's gastronomy.

The Minister of Tourism also highlighted the other two measures concerning tourism in the current tax reform sphere, and, according to his assessment, they went undetected all but fell below the media's radar.

These are the non-taxation of the cost of accommodation and food for all workers, ie, those who live on the premises of their workplaces, as well as payments for holiday service workers during the off-season, which is known in the public as the "cro card" project.

Make sure to follow our dedicated business page for much more.

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