ZAGREB, Aug 21, 2020 - The Finance Ministry has put up for public consultation documents for amending four taxation laws: income tax, profit tax, and Value Added Tax laws and legislation on fiscal receipts in cash flow, the Jutarnji List daily said on Friday.

The finance ministry recalls its promises on the continuation of the reduction of the tax burden and underlines that the income tax legislation will be amended with the aim of facilitating efforts to increase the amount of after-tax available income to citizens.

To this aim, the income tax brackets will be lowered: the current 36% will be scaled down to 30%, 24% to 20%, and 12% to 10%, and the changes could go into force in early 2021.

This move will increase the available income after tax from 100 kunas for lower wages to 800 kunas for the highest gross monthly wages.

The profit tax is likely to be cut from the current 12% to 10% for small and medium-sized companies with the annual earnings up to 7.5 million.

The national VAT regulations are going to be adjusted to the European Union's directives.

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ZAGREB, July 16, 2020 - Finance Minister Zdravko Maric said on Thursday that it is not true that VAT in tourism and hospitality is 25%, since it is generally 13%.

Asked whether a VAT reduction was on the cards as called for by some of the entrepreneurs Minister Maric first said that VAT is a neutral item for payers but that he presumes they are referring to the hospitality sector.

He went on to say that that was one of the topics discussed over the past few days with representatives of that sector.

"The only segment in tourism that has a VAT of 25% is delivering beverages to hospitality facilities. Everything else is practically at 13%: from accommodation to delivering and serving food hence if we look at it overall, VAT in tourism is 13%," said Maric.

He announced that the new government would continue with tax cuts at the "same pace" as until now. He recalled that the incumbent government began cutting taxes practically at the start of its term in power.

The introduction of the euro as Croatia's official currency, thus replacing the Croatian kuna, has been the subject of much talk and heated debate. While some are completely for the move for practical reasons, others are sad to see the kuna go, seeing the introduction of the euro as a loss of Croatia's precious identity, which was so hard-won.

The debate about Croatia's imminent entry into the formerly highly problematic Eurozone continues to go on, with frightening memories of the Greek crisis still fresh in many a mind. Some are even demanding a referendum on the adoption of the euro, but the truth of the matter is that Croatia had to agree to adopt the euro eventually in order to join the European Union, of which it became a full member back in July 2013. Love it or hate it, it's happening - but when?

Croatia has officially sent its letter of intent to the appropriate bodies, as well as a list of promises to reform many key areas in the country's usually draconian national policies. The country's letter was met with a positive reaciton from the powers that be, and Croatia now has a mere twelve months to implement everything asked of it in order to enter the ERM II, a sort of pre-euro waiting room, in which it will remain for around two years.

As Poslovni Dnevnik writes on the 15th of July, 2019, the aforementioned letter of intent that Croatia sent to Brussels regarding Croatia's planned introduction of the euro was assessed by Finance Minister Maric as one of the most important moments in Croatia's recent history. It is possible, as he himself says, that the euro will become Croatia's official currency at the beginning of 2024, as he said to RTL.

"It's difficult to say which year it will be, but I'd say that [the above mentioned date] is possible. We've taken over the obligations to fulfill some of the [prescribed] measures. We have to do this ourselves to boost economic growth. The year you've mentioned is realistic,'' the minister confirmed.

He also announced what many, especially those working in tourism, have been wanting - a lower VAT rate from January the 1st, 2020.

"We have pledged to continue reducing the parafiscal charges. One of the relief measures is the lowering of the VAT rate as of January the 1st, 2020. We're well on track to find space to give a new ''flywheel'' to employers to be able to pay their employees higher salaries. When it comes to what shape that will take and which way it will be done, we'll have to wait a few more weeks. When we do everything, I will first present it all to the President of the Government, the Croatian Government and the parliamentary majority, and then we will go public with it all,'' the minister stated.

The final decision when it comes to Croatia's entry into the Eurozone lies with the Eurozone's member states, and the European Central Bank.

Make sure to follow our dedicated politics page for much more on the political scene in Croatia, as well as Croatia's pending Eurozone entry.

The trend of the Republic of Croatia's foreign debt falling on an annual basis has been going on since the end of 2015, according to RBA analysts in light of their review of the recently published data of the Croatian National Bank (CNB/HNB).

As Poslovni Dnevnik writes on the 5th of February, 2019, at the end of October last year, Croatia's gross foreign debt amounted to 38.4 billion euro, which is less by as much as 4.1 percent when compared to one year before, meaning that the country's foreign debt fell to its lowest level since back in September 2008, according to a new analysis carried out by Raiffeisenbank Austria (RBA).

RBA pointed out, in addition to the fact that the falling of Croatia's foreign debt has been a trend since 2015, that the fall of this debt in October in particular is the result of a decline in the debt(s) of other financial institutions, which fell by 13.1 percent, as it also did in other similar sectors.

Thus, the gross foreign debt of other Croatian (domestic) sectors dropped to 13.5 billion euro at the end of October, or by 5.3 percent year-on-year, continuing the trend of depreciation dating from January 2016, as was stated on Tuesday.

The gross foreign debt of the state amounted to 13.7 billion euro at the end of October, which was 0.4 percent less than it was one year earlier. The growth of Croatia's gross foreign debt at an annual level was recorded only in direct investments, by 4.4 percent, to 6.3 billion euro.

"We expect the data for the last two months of 2018 to point to the continuation of similar developments, and at the end of 2018, the relative indicator of external borrowing should be below 75 percent of GDP," RBA analysts point out.

They expect that this year's debt to gross domestic product (GDP) will decline, thanks to the growth of the domestic economy and further diversification of all of Croatia's key sectors. "Further reductions in debt in the corporate sector are expected as a result of the discrepancies in the cost of financing on domestic and foreign financial markets," analysts from RBA have stated.

However, a tightening monetary policy and worsening funding conditions in regional and global financial markets could warn of a potentially negative impact.

"[This is particularly concerning] in the case of Croatia's modest progress in the implementation of structural reforms, which leads to an increase in risk perception and, consequently, the risk premium of the country itself," concluded RBA's financial analysts.

Make sure to follow our dedicated business and politics pages for more infromation on Croatia's financial situation, doing business in Croatia, and the overall business and investment climate.

As Poslovni Dnevnik writes on the 26th of January, 2019, the low rate of taxation and the simplistic way of ''doing the books'' has apparently led to a large increase in people setting up obrts and freelancing in Croatia. Minister Zdravko Marić announced that the Croatian Finance Ministry will "consider this segment in particular and see how it will be treated in the future".

Judging by the discussions that took place at the 2nd Tax Conference, the next round of tax changes could be concentrated primarily on obrt owners and other freelancers, with the possibility of further lowering the tax burden on wages.

Minister of Finance Zdravko Marić announced that the Croatian Finance Ministry intends to alter a few things for Croatia's numerous freelancers, but didn't really specify in what direction those changes will go and when these changes will happen. It is to be expected, however, that the Croatian Finance Ministry will prepare the changes during the course of this year, according to a report from prviplan.hr.

At the Taxation Conference, organised by the Faculty of Economics in Zagreb and Deloitte, and was attended by representatives of the scientific and business community, representatives of the Croatian Finance Ministry and the Tax Administration, Minister Marić reported on the effects of the previous changes in the Croatian tax system.

Minister Marić reported that about 150,000 taxpayers in Croatia are paying tax on their earnings.

He said there are about 35,000 j.d.o.o's, 106,000 registered self-employed businesses, including 37,000 obrt owners. When it comes to private renters who pay a flat tax, there are about 95,000.

Commenting on the rapid growth in the number of obrts paying taxes on a flat-rate basis, Minister Marić said that the Croatian Finance Ministry has made a big step forward and simplified the management of the books, but that "this segment needs to be considered and it should be seen how things will look in the future."

Marić's announcement came after the introduction made by dr.sc. Hrvoje Šimović from the Faculty of Economics in Zagreb, who said that the growth of those paying flat tax now looks good, especially because of encouraging levels of those who are self-employed.

"But in the future, obrts will prove to be the biggest problem in regard to the tax aspect. The potential for abuse will increase due to taxpayers' efforts to make sure their net income remains as much as possible,'' said Šimović.

Minister Marić emphasised that the Croatian tax system needs to be fully understood and that the essence of tax reform is to make the system simpler, more predictable and consistent, offering a better sense of understanding and security for everyone.

"We're doing the same for all taxpayers. It's not true that we're only good for those who pay a lot of tax, and that we're purposely trying to make it more difficult for those who pay less. It's precisely in the segment of small and medium-sized entrepreneurs that the biggest reform has been made in the first round of [tax] reforms. The profit tax rate has dropped from 20 to 18 percent, or 12 percent for companies with up to three million kuna of revenue. A lot has been facilitated,'' Marić noted.

He stressed that he remains a big advocate for tax cuts.

Follow our dedicated politics and business pages for much more.

As Poslovni Dnevnik writes on the 31st of December, 2018, Finance Minister Zdravko Marić presented the Croatian Government's new ''demographic measure'' on Sunday for Dnevnik HTV, by which the non-taxable amount of so-called ''newborn allowance'' has been raised to a very handsome 10,000 kuna.

"An employee who has a baby'' said Marić, "her employer has the ability and the right to give her money for the newborn baby. The non-taxable amount is 3,362 kuna, but this amount has been raised three times higher and amounts to 10,000 kuna,'' announced the finance minister during an interview with HTV.

The order by the Croatian Government which regards this measure will be published on Wednesday, January the 2nd, 2019, and will come into force as of Thursday, January the 3rd, but it is already technically applicable today, added the minister.

Looking back, this has been the year in which Marić, who has been serving in the Croatian Government for a while now, stated that he was satisfied with continuing the trend of Croatia's declining public debt, which fell by 10 percentage points in just three years. It is expected that this year,  interest rates will fall below 9 billion kuna.

"Since 2015, we've cut interest rates by more than a quarter, we're paying lower interest rates, and I'm particularly pleased with what we've done for the highways and for the roads," said Minister Marić, emphasising that they continue to remain in "Croatian hands".

Recalling the alarming debts which still very much haunt Croatia's healthcare system, he said that redistributing money to the Ministry of Health can't be a viable solution to that problem.

"I'm happy that we've been able to reduce payment deadlines, especially the state ones, for a year. I'd like to see if these reduced payment periods reflected on the reduced cost of purchasing medication," Marić said.

He emphasised the need for the Croatian Government to apply a combination of measures on the revenue and expenditure side of the health budget.

"We have contributed through the third round of tax breaks, we've raised the budget for healthcare by 1 percentage point, around 1.350 billion kuna, but that won't be enough," he said, concluding that the Croatian healthcare system must be financially sustainable.

Make sure to follow our dedicated politics page for much more.

Amid rumours that the finance minister, Zdravko Marić, is set to step down from his position within the Croatian Government as soon as next month, PM Andrej Plenković has been having his refusal to outright deny the claims scrutinised, with some believing that this means Marić's departure was imminent and due to take place in early 2019. It seems however, that Marić isn't going anywhere.

As Poslovni Dnevnik writes on the 9th of December, 2018, HDZ President and PM Andrej Plenković said on Saturday that Finance Minister Zdravko Maric isn't going to leave the government.

"There will be no departure," Plenković told journalists after the he was questioned about whether or not he'd talked to Marić himself about his alleged departure from the cabinet before the end of his mandate, as was being circulated by some media outlets.

The Prime Minister, upon being questioned about the criticisms of controversial SDSS President Milorad Pupovac regarding recent arrests in Vukovar, said that he didn't listen to that press conference, adding that the current government is not interfering with the work of the police or with the work of DORH in any manner whatsoever.

He pointed out, in order to quell people's natural suspicions that "there are no invisible political hands" holding any influence over this process.

When asked about the elections for the European Parliament, PM Andrej Plenković stated that the party would be "almost sure" on their own and that at least five mandates can be expected. "We'll win convincingly in those elections," he said briefly.

Concerning the controversy around the procurement of Israeli F-16 aircraft, Plenković reiterated that everything that the Republic of Croatia did in this process was done systematically, thoroughly, and in fine detail, and that open issues, if there are any, exist solely between Israel and the United States of America, and are nothing to do with Croatia or the part Croatia played in the process.

He confirmed that he visited Zagreb's mayor Milan Bandić was taken to hospital yesterday morning, adding that Bandić claims to be feeling good and that he believes that he will recover and be back on his feet quickly.

Make sure to follow our dedicated politics page for more on PM Andrej Plenković, the Croatian Government, and updates from both domestic and European politics in Croatia.

Neither Prime Minister Plenković nor Zdravko Marić himself have come out and actually denied the rumours about the Croatian finance minister's potential departure from the government.

As Poslovni Dnevnik writes on the 8th of December, 2018, although no one has officially confirmed this, some claim that a quick analysis of the statements made by both Prime Minister Plenković and Zdravko Marić himself suggest that it is apparently ''almost certain'' that the longtime Croatian finance minister is set to leave his government position.

This information has begun circulating at a very inconvenient time and amid quite a bit of controversy, given the fact that Zdravko Marić's older sister has been promoted in HANFA, which is ironically the organisation investigating the finance minister for his activities during the height of Agrokor saga, which still isn't over. Good timing you say? You're right.

To quickly recall, this isn't the first time the Croatian finance minister has fallen out of favour in such a public manner. Marić used to work at Agrokor before taking on his government position, and as more and more came to light in regard to Agrokor's messy story, many began to suspect that he knew much more than he was letting on about the crimes which allegedly took place under the gigantic company's former owner, Ivica Todorić.

Despite having held strong to his statement of innocence and managing to survive this political test, ultimately retaining his position, the cloud of suspicion surrounding him never truly went away, it only engulfed Martina Dalić instead, the fomer deputy PM, who became a welcome distraction for the minister tormented by his past.

Regardless of the passage of time and the stepping down of Martina Dalić, the curse of the former Agrokor crisis has come knocking at Croatian finance minister's door once again, and this time it looks like he won't be getting off quite as lightly.

Upon being asked, Prime Minister Plenković's response has been scrutinised deeply, and for some it could be concluded that the Croatian finance minister's time is up, purely and simply because the he did not deny it when asked, writes Večernji list.

Similarly, Marić didn't deny it himself, either. The question now is not only who would potentially replace Marić in the government, but whether or not this could potentially be a chance for the reconstruction of the current government.

While unconfirmed, speculation suggests that Marić's departure from the government will take place next month, which would in itself be logical because he has already compiled a budget for next year.

The exact name of the person who either may or definitely replace Marić is still unknown, primarily because this information remains officially unconfirmed. But those speculating have suggested that it could be Tomislav Ćorić, the curent minister of energy and environmental protection, but sources close to the government claim that if he is doing his job well and that such a move would make no real sense. It would also be his third new ministry if it were to occur. So, it seems difficult to imagine Corić taking over Marić's job.

The speculation of potential names continues, despite the fact that the rumours of the current Croatian finance minister leaving his position early next year remain unconfirmed. 

Make sure to stay up to date on this situation and much more on the domestic and European political stage by following our dedicated politics page.

In case you didn't know, Martina Dalic, the former deputy prime minister who spent a long time at Andrej Plenkovic's side, left her position earlier this year amid not only the Hotmail affair, in which she was sending highly sensitive emails via no less than Hotmail, but amid growing suspicion surrounding her in regard to the very messy Agrokor affair.

Now, despite the public's general opinion of her being less than sparkling and with all sorts of unsavoury suspicions and accusations about her involvement in Agrokor still flying around, left unanswered, Martina Dalic went ahead and published a book on Agrokor, causing raised eyebrows among many politicians, including MOST's leader Bozo Petrov, who was heavily involved in the Agrokor situation when it first came to light, especially given the fact that the crisis saw the former HDZ-MOST coalition collapse.

As Poslovni Dnevnik/Tomislav Pili writes on the 30th of October, 2018, Finance Minister Zdravko Maric, who felt the very personal unpleasantness of the Agrokor crisis on his own skin, stated quite bluntly that he didn't have any desire to comment on whether or not Martina Dalic should return to the government at all.

Marić used to work for Agrokor before taking up his position within the Croatian Government, this caused a lot of suspicion around him, too, as many across the political spectrum and in the general public failed to believe that he had no knowledge of the plethora of underhand deals and the threatening collapse of the company that eventually raised its ugly head in the spring of 2017. Despite the controversy, Maric stuck to his guns and held onto his position, with the situation eventually blowing over. Despite that, it doesn't come as much of a surprise that he'd prefer to avoid discussing Martina Dalic or her new book.

"I've got a good relationship with all the people I've worked with and am working with now, and if we have some disagreement, then we find a common language," the finance minister said briefly.

''I haven't read Martina Dalic's book and I don't know if I'll manage to,'' Maric added at the margins of Poslovni Dnevnik's conference. In response to a journalist's question as to whether everything worked well in regard to Agrokor's extraordinary administration, and why Martina Dalic had to leave, Maric expressed his lack of desire to comment on whether or not she should return to the government.

As for the dangers the Uljanik shipyard situation represents towards public debt, Maric said Uljanik's influence will of course have an effect on the overall fiscal policy outcome for this year.

"The only good thing about it is that it will have a one-off effect. From our side, we intend to solve [the situation] as soon as possible so as to avoid any further consequences. Nevertheless, by the end of the year, according to our projections and expectations, public debt will continue to decline,'' Maric emphasised.

"With regard to taking further steps, we can't influence the worsening global environment that much, but do we have certain mechanisms in our hands. I, as finance minister, am responsible for implementing fiscal policy. All we propose is a responsible, rational fiscal policy that suits all of the challenges we're facing. We're putting emphasis on a more stable public debt, but the basic idea of us all should be ​​economic growth, which will lead to stronger employment growth,'' Maric noted.

Journalists present at the conference in were also very interested in the disappearance of the so-called "mantra" about budget savings which has been being talking about a lot over recent years.

"I wouldn't say that is stopped. If you look at the structure of the expenditure side of the budget, the biggest item is the retirement expenditure. It's true that the issue of expenditure has been challenged more than once and we must not give up on that. We reduced interest costs by over two billion kuna, but we're still paying too much,'' Maric said.

Regarding retirement, the question of whether or not retirement benefits in the new Law on Croatian Defenders represent a budgetary burden arose, to which Maric responded that his ministry had looked into potential financial implications during the process of the adoption of the naw Law on Croatian Defenders.

"The Law on Croatian Defenders is fiscally viable and isn't an additional burden for the budget," Maric concluded.

Want to find out more about what exactly happened within Agrokor and learn more about Martina Dalic's role within it all? Click here and follow the news on Dalić, the Hotmail affair, the writing of Lex Agrokor, and more.

Click here for the original article by Tomislav Pili for Poslovni Dnevnik

When the economic situation isn't going your way, is there a way to redirect it? Maybe. Until you're caught.