Primorac: We are introducing option plans for companies that will allow employees to have shares in the company

Finance Minister Marko Primorac said on Tuesday that the announced tax reform will not disrupt the tax system, and will give local authorities the opportunity to reduce the tax burden and increase citizens’ salaries.

– I believe it is much better and more transparent for the reliefs that would help those with the lowest salaries to be implemented in the pension insurance contribution system – said Primorac at the American Chamber of Commerce (AmCham) conference ‘Sustainable Tax System – Policy, Practice, and Perspectives’.

According to him, the government has taken measures to ensure that the new round of tax reform does not disrupt the pension system.

He reiterated that the government plans to increase the autonomy of local self-government units and give them the ability to determine income tax rates within the frameworks set by the central government. He emphasized that this will not be without limitations and that these ranges will be sustainable.

– Tax policy plays an important role in strengthening social security, relieving the economy, and helping the most vulnerable – he said.

He believes that this will increase the competitiveness of the economy.

AmCham welcomes the tax changes and considers it a good opportunity for Croatia and its economy, said AmCham President Andrea Doko Jelušić.

– AmCham expects further relief of salaries in this round of tax reform, which will lead to greater purchasing power for citizens in times of inflation. However, tax policy should continue to focus on relieving the tax burden on businesses to enable further investment in innovation, growth, and development, as well as retaining the workforce in Croatia – said Doko Jelušić.

In the Recommendations for Tax System Reform in 2023, AmCham proposes increasing the non-taxable personal deduction to 650 euros, reducing the income tax rate from 20 percent to 10 percent, and the tax rate from 30 percent to 25 percent, as well as reducing mandatory contributions.

AmCham also proposes the application of option plans in limited liability companies, along with a reduction of the tax rate from 20 to 10 percent, and that the value of income from option plans be considered gross income, in order to avoid inflating the effective tax rate.

Minister Primorac confirmed the introduction of option plans for limited liability companies. This means that owners of such companies will be able to grant shares in the company to their key employees, thereby rewarding and retaining them further.