Last year, Croatian IT industry had more than a billion euros in revenues and 2.41 billion kunas in exports.
For the first time, the government has recognised that, in addition to agriculture and tourism, there are many new small-sized entrepreneurs with high potential for growth and employment in the local IT industry as well, reports Poslovni.hr on September 18, 2017.
A new proposal to amend the Law on Investment Promotion will bring an opportunity to small IT entrepreneurs to use a 50 percent tax break on corporate taxes for 50,000-euro investments, provided they open at least ten new jobs. The Croatian Independent Software Exporter Association (CISEx) strongly supports the proposal. According to its data, the Croatian IT industry last year for the first time had revenues over a billion euros, while its exports jumped to 2.41 billion kunas. The sector also opened 1,341 new jobs.
Generators of that growth are micro and small IT companies, mostly software and export-oriented. Although these businesses are facing problems, such as a shortage of workforce which has slowed down their growth, the IT industry is the only one in Croatia with predominantly local capital, high liquidity, low debt, and a tremendous investment interest.
Tajana Barančić, the president of CISEx, says that, in terms of investments, they had open and productive communication with the Economy Ministry. She explains that software companies do not invest large amounts in long-term assets since their business operations do not demand that.
Gordana Kovačević, the CEO of Ericsson Nikola Tesla, says that this is a positive move towards the entire ICT industry. “I think it will positively contribute to the interest of small and medium-sized and large ICT companies to continue with their activities and business development, including opening new jobs,” says Kovačević and adds that preserving employment and the sustainability of business operations “must be part of the system of monitoring the impact of all regulations and incentives on the strategic development of our industry.”
Barančić says that, with the proposed changes to the law, a software company investing 50,000 euros in long-term assets and opening ten new jobs with a gross salary of 15,000 kunas would be able to use incentive measures worth up to 45 percent of the investment. “This amount will be received through a number of steps, most important of which are the reduction of the corporate tax rate by 50 percent, one-time non-refundable incentives for opening of new jobs, one-time incentives for training of new employees, and possibly the grant for investing in research and development equipment up to 20 percent of its cost,” explains Barančić.
She adds says that entrepreneurs with less than nine employees, the so-called micro-entrepreneurs, which are very common in the IT sector, will be allowed to open three new jobs in three years, and not in just one year as it is now required. Also, they will be authorized to use the funds to buy equipment up to five years old, and not just the new one.
Translated from Poslovni.hr.
