Government amends 9 laws in bid to ease tax burden

The government on Thursday forwarded amendments to nine tax laws to parliament, including the VAT Act which should enable the easing of tax burden as of the start of 2019, and the effects of these changes are estimated at HRK 1.4 billion by expanding the lower VAT rate of 13%.

Amendments to the VAT Act foresee expanding the application of a lower 13% VAT rate as of 2019 on children's nappies, livestock, fresh meat, fish, fruits and vegetables and eggs which has now the standard 25% VAT rate.

The standard rate is supposed to be lowered to 24% as of 2020, which may increase disposable income by 1.6 billion kuna. 

Profit Tax in line with EU Directive

Amendments to the Profit Tax Act are being proposed to bring it in line with the EU Directive on laying down rules against tax evasion practices that directly affect the functioning of the internal market with reference to those sections that enter into force as of 1 January 2019.

Income Tax Amendments

Amendments to the Income Tax Act propose that the tax bracket be reduced from 36% to 24% for monthly wages up to HRK 30,000. According to the incumbent law, an advance income tax rate of 24% is paid for monthly wages up to HRK 17,500.

The government estimates that this would mean a significant increase in wages particularly of workers in the high technology sector and qualified professionals such as doctors, IT experts and pharmacists which should curb the brain drain of highly-qualified workers.

Changes to contribution payment means HRK 900 million in savings for employers

The proposed amendments to the Law on Contributions recommends that the contribution for employment of 1.7% be abolished as well as the contribution for work safety of 0.5% while contributions for health insurance would be increased from 15% to 16.5%.

The revocation of contributions for employment would lead to a reduction of HRK 2.2 billion in the state budget's revenue. Having in mind the abolishment of the contribution for work safety, an increase in health insurance contributions will offset this measure and eventually bring about HRK 1.3 billion to the budget of the Croatian Fund for Health Insurance. (HZZO)

Property Sales Tax 3% next year 

Property Sales Tax, according to the proposed amendments would be reduced from 4% to 3% as of 1 January next year.

The Croatian government on Thursday adopted the national development plan for clinical hospital centres, clinical hospitals, clinics and general hospitals for the 2018-2020 period, which aims to ensure further reform of the hospital system.

The national plan is a prerequisite for the implementation of the reform measures aimed at modernising hospital capacities and increasing the quality of hospital services, which includes the preparation and implementation of EU-funded projects for health institutions, Health Minister Milan Kujundzic said.

The proposed plan is based on two main principles - the principle of subsidiarity and the principle of functional integration, and its main objective is the construction of a national university hospital as the umbrella institution of the Croatian healthcare system. Its first phase would include the construction of a national children's hospital.

Text: Hina

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