Croatian Tax System Is Competitive and Modern

24. April 2007, 00:00

The Croatian tax system is not far behind the Austrian system, and is a competitive and modern system, said Christian...

The Croatian tax system is not far behind the Austrian system, and is a competitive and modern system, said Christian Widhal from Vienna University at a round table on taxes held in Zagreb Monday. Certain adjustments to the EU standard system are still necessary, although Croatia still has the full potential to become an attractive investment destination, Widhal added.

Croatian Chamber of Economy Chairman, Nadan Vidosevic, opened the discussion at the first international round table on taxes with an appeal, addressed to the current as well as to the future Croatian government.

“Don’t change taxes. Don’t practice on people as people are tired of tax changes. A stable tax system is fundamental for the stimulation of investments. Not even the rates are as crucial as stability, longevity and predictability of the tax system,” said Vidosevic.

Finance Minister Ivan Suker agreed with Vidosevic, citing tax system consistency to be a certain way of collecting tax funds. He stated that social compensations were a burden that were faltering Croatia’s competitiveness, mostly burdening the wages of the employed.

Such compensations on a HRK 4,500 monthly wage made for 90 per cent of all burdens, while taxes accounted for 10 per cent.

"When you take a look at the expenditures for covering pensions and health, then you will see that income from compensations for pension and health insurance cover only 60 per cent of those expenditures. Last year, that accounted for a HRK 15 billion deficit,” said Suker.

The minister emphasised that the Government still has to cover certain tax policies that Croatia has left over from the war, in the legislative adjustment process.

“This included a zero rate for added values in areas of special state care. We simply have to say this was specific for Croatia. Not a single one of the new or old EU membership states had a war, nor do they have a 10-per-cent budget expenditure as a direct or indirect consequence of the war,” Suker said. 

Suker also mentioned a plan for the introduction of a unified tax number, which would enable the unifying of data on properties and companies.

“At the moment, Croatia has no singular identification marking, with which we may access all information and figures for the taxing of companies and individuals. Unfortunately, since we do not have any such registry of individuals or companies, we come to the fact that we have no way of protecting their privacy," he added. 

Suker also brushed up on the discussion concerning a flat rate on income, profit and added value taxes, concluding that such a rate would not be profitable for Croatia, due to such specifics as the war aftermath. (Vecernji List)
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