VAT on OTC drugs to be lowered to 5%, tax-free bonus amount to rise to HRK 7,500

The government on Friday sent to the parliament a set of nine final bills on taxation envisaging amendments to the Value Added Tax legislation, including a lower, 5% rate on prescription drugs as well as on over-the-counter drugs, and a rise in the tax-free amount of annual bonuses for employees from HRK 2,500 to HRK 7,500.

The final set of draft laws envisages that all medicines, including prescription and OTC drugs, should be taxed by a 5% rate, Finance Minister Zdravko Maric said, recalling that currently the tax rate for prescription medicines is 5% and for other drugs 25%.

The VAT rate on the services of writers, composers and artists and the related copyrights is to be lowered from the standard 25% rate to 13%.

The same reduction can be expected regarding the VAT on fresh meat and fish, fruit, vegetables, eggs, live cattle delivery and nappies.

Maric said that those were the most important items of the consumer's basket.

Also, the legislative changes envisage a threefold increase in tax-free annual bonuses to employees such as Christmas and Easter bonuses, holiday allowances and extra monthly wage. Thus the nontaxable amount of the bonuses will be set at HRK 7,500.

Prime Minister Andrej Plenkovic described that as good news.

"I think that this is what many employers had hinted at when it comes to tax changes," he said about the changes that are to take effect on 1 December.

Text: Hina

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