Marić on the Contributions Law: We Will Not Act ‘Stubbornly’, We Are Listening to Entrepreneurs’ Critiques

The government does not want to impose additional tax burdens on entrepreneurs, and after the public consultation on the package of tax changes is completed, there will be opportunities to analyze all critiques of the proposed changes, stated Finance Minister Zdravko Marić on Tuesday.

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When asked after the meeting in the government whether the announcement of increasing the base for calculating contributions for presidents and members of management boards had been abandoned following the strong reactions from entrepreneurs, Marić replied that public consultation is ongoing and that the strong reactions are one of the results of that consultation, which the government will consider.

The Ministry of Finance has, in fact, submitted a proposal for increasing the base on which presidents and members of management boards must calculate pension and health contributions from 0.65 to 1.1 average gross salary, which has provoked numerous critiques from the entrepreneurial community.

“There are a lot of comments, some may be a bit sharper, but we accept all of them and take them into account, and by the end of the procedure, we will find the best solution,” said Marić.

He emphasized that there is no intention to act ‘stubbornly’ and that the government and the Ministry of Finance have already shown that they ‘are listening’.

He reminded that entrepreneurs have requested measures in the area of tax treatment of seasonal workers, recognition of costs for the purchase and maintenance of vehicles for official purposes, and that the government has responded within fiscal possibilities.

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Regarding particularly small and medium enterprises, which are most concerned about the announcement of raising the base for contributions for directors and members of management boards, Marić reminded that the government has introduced the calculation of profit tax based on cash flow up to three million kuna, or based on realized invoices, rather than on an accrual basis, which means that tax is paid on delivered but unpaid goods and services.

In addition, the profit tax rate has been reduced, Marić reminded.

“Our idea from the very beginning is to stimulate and encourage entrepreneurship, and I regret that in some matters it may seem that this is some kind of counterattack. No, in no case,” said Marić, reiterating that the government will consider all comments received during the public consultation.

When asked if the coalition partners think the same, he replied that it is ‘the same thing’ with them and that in the package of tax changes, the largest change is the reduction of the VAT rate on fresh meat, fish, fruits, and vegetables, and that a significant change is the reduction of contributions on wages or the abolition of contributions for employment and work-related injuries.

“It is not our intention to create any additional burdens on entrepreneurs, especially small and medium ones,” asserted Marić.

When asked if this means he is ready to abandon the proposed changes, he reiterated that public consultation lasts until September 6, after which the government’s procedure and two readings in parliament will follow, so there will be time for a reasoned discussion, so that the tax changes as part of the third round of tax reform come into effect on the first day of the next year.

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The overall effect of tax relief within the reform that began at the beginning of 2017 is estimated by the finance minister at six billion kuna.