Marić: There Will Be No Changes for Small and Medium Enterprises

Finance Minister Zdravko Marić stated on Saturday that the amendments to the Contributions Act aim to prevent abuses observed in recent years, noting that these legal changes do not apply to those members of the management board, i.e., directors, who are registered in full-time employment and that there will be no changes for small and medium enterprises.

“These changes are primarily to prevent abuses that we have noticed,” Marić said, commenting to reporters on the proposed amendments to the Contributions Act that have recently been sent for public discussion.

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The changes, he emphasizes, should not apply to members of the management boards of companies, i.e., directors, who are registered for full-time work. “What we are targeting are the forms of appearance that we have seen,” he pointed out.

He noted that in the first step, a good portion of them were registered at minimum wages, and what they have seen in the past period is that they were also registered for part-time work.

Marić said that today in Croatia, there is a situation where “for 12 minutes of registration in a trading company, or 48 kuna per month, you have the right to full health insurance and pension service.”

“That is the element we have targeted among other things, because on one side you have a very unequal position of craftsmen ‘income earners’ compared to these entrepreneurs, in this case, members of the management board,” he warned.

He also mentioned that today there are about 175,000 members of management boards – directors of various forms of companies. Of them, only 460 are registered as members of the management board, and are not in employment with that company. About 65,000 members of the management board are members of the management board and at the same time in employment with that trading company. The remaining part, around one hundred thousand, he explained, are members of the management board and directors who are insured on some other basis – whether they are employed in another trading company, whether they have established their own family farm, or whether they are craftsmen, ‘flat-rate earners’…

Commenting on criticisms that the proposal is against entrepreneurship, Minister Marić reiterated what the current government has done for entrepreneurs so far: reducing the corporate tax rate from 20% to 18%, while for small and medium enterprises it has been reduced to 12%, the possibility to report their profit in corporate tax according to cash receipts rather than on an accrual basis, and others. He also noted that certain changes were made due to the ICT sector to stimulate that activity and retain our engineers, as well as attract international experts.

Marić also stated that with this proposal, when an entrepreneur pays a type of reward to their management board member or employee in the form of a share in profits or shares – that type of income will no longer be taxed as income from salary but as capital income.

Zero Tolerance for Abuses

He also responded to HNS’s criticisms that they would not support the proposal to increase the base for directors’ salaries, saying that he spoke yesterday with the leadership of that party and they agreed that it is necessary to delineate what true entrepreneurship is in Croatia. He emphasized that the government wants to stimulate, encourage, and facilitate such forms of activity and entrepreneurship, but at the same time, they must have zero tolerance for various types of abuses where tax actions that mean tax or contribution avoidance are carried out under the guise of entrepreneurship.

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He reiterated that the intention of the proposal was not to target members of the management board who are registered for full-time work and who are dedicated to entrepreneurship every day. He emphasized that for true small and medium enterprises, which are registered for full-time work only in that company, there will be no changes except for the better.

When asked about the reduction of VAT on fresh meat and how to define it, Marić said that the framework is defined in the VAT law itself, and the specification will be defined in the VAT Regulation. “The category of fresh will be very precisely defined, meaning fresh meat or fresh fish, as well as fruits and vegetables,” he said.

The State Aware of the Importance of Uljanik

In response to a journalist’s question about whether the state will get involved in solving the problems of the Uljanik shipyard, Marić reminded that the state has a minority stake in that company, but they are aware of its importance and significance. He recalled that dialogue is ongoing with the European Commission from which they expect the next steps. Regarding unpaid wages, Marić believes that there is also responsibility on the part of the management and the trading company that leads Uljanik.