Croatian exporters are the generator of development and economic growth

Prime Minister Andrej Plenkovic said on Friday work was under way on a tax reform in which cutting VAT by one percentage point would not be the only measure, but one of a set that wouldn't put budget revenues at risk.

Speaking at the 13th Croatian Exporters conference, he congratulated the recipients of the Golden Key award, saying it was a big success for them and part of the contribution to Croatian exports in 2017, which went up 14% annually to more than HRK 14 billion.

"They are very encouraging and great results, and I'm confident that you will continue to work along those lines on your output, your business plans, your skills and know-how, in order to be present on the global market," said Plenkovic.

He said that unlike the time before 2008, when the main driver of growth was excessive domestic demand, Croatia's economy was now growing on sound foundations. "The rise of exports is one of the most important components of that growth, and we know that export-oriented societies create added value, jobs and competitive products."

In order to additionally improve the conditions of doing business, the government's policy will focus on a more favourable, safer and more predictable business environment, on entrepreneurial technological and innovative ability in order to raise the quality of exports, and on an efficient public administration and justice system, Plenkovic said.

He announced that the tax reform would be ready in the autumn and would enter into force next year. He said that, in line with the election programme, the government would cut VAT by 1 pp.

"But that won't be the only measure. It will be part of the measures which won't endanger the budget's revenues side. On the contrary, we believe that the combination of measures will also facilitate better revenues, reducing the fiscal pressure on both taxpayers and enterprises. All the measures will make Croatian exporters more competitive. That's why, in the coming period, we will see what we can do about the burden on salaries."

Plenkovic said he was not referring only to income tax, recalling that now that is local government revenue and that local government units were extremely pleased with that. "That's why we will see which other aspects we can make realistic in order to relieve employers, resulting in higher net income for our citizens and employees."

Commenting on the law on emergency administration in the indebted Agrokor conglomerate, he said it had given many companies within the conglomerate time for consolidation before a settlement was reached. "Looking at it from the aspect of state interests, the fundamental goal has been achieved: Croatia's economy and financial system didn't experience a disaster."

Addressing a convention of Croatian exporters in Zagreb on Friday, Prime Minister Andrej Plenkovic spoke about the positive effects of Croatia's accession to the European Union and pointed out an increase in the volume of Croatia's commodity exports.

Thus, five years ago when the country joined the bloc, Croatia's exports stood at 9 billion euros, while currently they are higher by 50%, reaching EUR 14 billion, owing to the removal of barriers, Plenkovic told exporters.

EU membership enables us to have a better absorption of European funds in total amounts, compared to the pre-accession period. This government has sped up the conclusion of contracts on withdrawing EU funds, and the rate of completed contracts was 9% in 2016 and currently 43%, and we plan to raise it to 60% by the end of this year, the premier said, adding that this gave rise to hope that Croatia could use the whole financial envelope of 10.3 billion euro which is available to the country within the 2020 plus three years time frame.

Plenkovic pledged to spare no effort to make headway in reaching agreement on double taxation avoidance with the United States.

"In 2018, Croatia is a member of the EU, a member of NATO, it's on the right track to join the Schengen area and euro area," he said.

He summed up his comments on EU membership benefits saying that relevant indicators show that taxes and interest rates are being reduced, public debt is falling, a budget deficit has turned into a surplus, the country's Gross Domestic Product is rising, employment, salaries and investments are growing and Croatia's credit rating is improving.

Imports are also on the rise, but those are normal facts for an open market, Plenkovic explained.

Becoming faster, better and stronger than others cannot be achieved only by the state authorities, we need the efforts of all of you entrepreneurs and you also should show resoluteness, Plenkovic said.

It is true that there are many positive indicators and there are many problems, and we face those problems in the society on a daily basis and we deal with all of them, without choosing only those which we would like to tackle, he said

Thus, he recalled that on Thursday, his cabinet put forward to the parliament draft amendments to legislation on child's allowance whereby the scope of recipients eligible for this benefit will be broadened to include an additional 94,000 families or 154,000 more children. It also endorsed draft amendments on subsidised mortgages for first-time home buyers.

He said that two ministries were now preparing legislative solutions for Croatian citizens with blocked accounts.

Text: Hina

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