Changes to income tax rates and the abolition of deductions in the income tax system are expected to be discussed in the Croatian Parliament by the end of June, so that their implementation could start on July 1, announced Deputy Prime Minister and Minister of Finance Ivan Šuker after today’s meeting of the Economic and Social Council (GSV).
According to him, the key change in the tax system is the reduction of the rate on income up to 3,600 kuna from 15 percent to 12 percent, as this directly helps those who are most vulnerable, and over time the trend will be for this rate to decrease from 12 to 10 percent. The abolition of rates of 35 and 45 percent does not help the wealthiest, claims Šuker, and with a rate of 45 percent, only a very small number of people were affected. For now, the government’s position is that the amount of 9,000 kuna will be the lower limit for taxation at a rate of 40 percent, but the Ministry of Finance is conducting further analyses and will consult with unions, employers, and tax experts, said Šuker.
At the GSV meeting, social partners supported the government’s model C for assisting companies in long-term difficulties and amendments to the Law on Golf Courses, and they also agreed to abolish the Economic Council established by former Prime Minister Ivo Sanader, as there is no longer a need for such a council.
Through amendments to the income tax and corporate tax laws, we will strive to simplify life for taxpayers, and we are considering what and how to do regarding the taxation of craftsmen to bring them to the same position as those who pay corporate tax, says Šuker. He stated that the deductions in the income tax system were used exclusively by citizens with higher earnings, and the government also considered that by abolishing deductions, it would not discourage contributions to voluntary pension and health insurance.
Through amendments to the income tax and corporate tax laws, contributions to the third pillar of pension insurance and health insurance will be recognized as business expenses and costs, which will be more favorable for citizens than it is now, claims the Minister of Finance. He emphasized that we should not only look at changes in tax laws but also measures in social policy, as, for example, after the land registry issue is resolved, social assistance will be provided based on property rather than income criteria, which will make the system clear and transparent. (H)
