ZAGREB, 22 Oct 2021 - The Croatian parliament on Thursday discussed amendments to the VAT Act proposing a lowering of the VAT rate on feminine hygiene products from 25% to 5% to reduce gender inequality in the national tax system.

Anka Mrak Taritaš of the GLAS party, who put forward the amendments, said that during her life every woman in Croatia pays around HRK 8,000 in VAT on sanitary towels and tampons.

She recalled that many European countries had lower tax rates for those products and added that the European Parliament in 2019 adopted a resolution on gender equality and taxation policy in the EU calling on member-countries to exempt feminine hygiene products from VAT.

She noted, however, that her proposal would probably not be supported by the parliamentary majority as the government lacked empathy for women, calling on it to put forward its own amendments if it considered her proposal inadequate.

Zdravko Zrinušić, director of the Tax Authority, said the proposal could not be supported because a systematic solution was required to avoid undesirable effects. He recalled that VAT had already been lowered on food, medicines, energy and municipal services yet that did not result in lower prices.

Nikolina Baradić of the ruling HDZ party said that she could not support Mrak Taritaš's proposal because it was inadequate, adding that the government cared about the equality of women and fought against poverty and social exclusion.

Ana Pocrnić Radošević (HDZ) said that VAT reduction had not resulted in lower prices but in an increase in retail margins. The experience of some countries shows that VAT reduction was not the right way to solve the problem, she said.

Sabina Glasovac (SDP) said that women pay HRK 130 million annually into the state budget just because they are women as they cannot function without feminine hygiene products.

That is not a luxury and should not be taxed with the highest rate, while VAT on cinema tickets and newspapers, which is not something one could not live without, is 5%, Glasovac said, noting that VAT on feminine hygiene products would probably be lowered when that was requested by the EU.

Katarina Nemet of the Istrian Democratic Party (IDS) supported the amendments, noting that Croatia should follow the example of countries where feminine hygiene products were free, for example in schools.

Marijana Puljak (Centar/GLAS) called on the government to support Mrak Taritaš's proposal as did Nikola Grmoja (Bridge).

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ZAGREB, Dec 20, 2020 - Croatia is entering 2021 with a fifth round of tax reform under which the two income tax rates will be reduced from 24 to 20% and from 36 to 36%, while the profit tax rate for businesses with an annual income of less than HRK 7.5 million would be cut from 12 to 10%.

The fifth round of tax reform, which will reduce the tax burden by an estimated HRK 2 billion, is governed by the amended laws on income tax, profit tax, VAT, fiscalisation in cash transactions and local government financing, which come into force on January 1.

Lower income tax rates - higher income for about 900,000 taxpayers

The amended Income Tax Act will result in higher wages or pensions as the lower rate will be reduced from 24 to 20% and the higher rate from 36 to 30%. The basic non-taxable monthly income remains at HRK 4,000, while monthly incomes of up to HRK 30,000 will be subject to the 20% tax rate instead of the 24% as has been the case so far and monthly incomes of above HRK 30,000 will be taxed at 30% instead of the present 36%.

Should employers use these lower tax rates to increase their workers' wages, that would mean an increase in net monthly pay of between several dozen kuna to up to 2,000 kuna, depending on pay rates, benefits for dependants and local tax rates.

Lower taxes for youth

The amended Income Tax Act also provides for tax relief for young people of up to 30 years old. Young people aged up to 25 years will be exempt from income tax and those aged between 26 and 30 will be entitled to an income tax cut of 50%.

Profit tax rate reduction

Under the amended Profit Tax Act, as of January 1 the profit tax will be reduced from 12 to 10% for businesses with an annual income of up to HRK 7.5 million. The lower rate will also apply to all non-profit organisations that pay a lump-sum tax rate, to dividend payments and to performances by foreign performers. 

For businesses with an annual income of more than HRK 7.5 million, the profit tax rate remains at 18%.

(€1 = HRK 7.5)

"At this rate of introduction of compensation measures, there won’t be anyone left to make use of them,” said Janko Kezele, Deputy President of the Rural Tourism Association of Croatia.