– My goal is for the U.S. Congress to ratify the double taxation agreement with Croatia by next year – said today Nathalie Rayes, the U.S. Ambassador to Croatia, reflecting on the contentious issue of double taxation of Croatian companies operating on U.S. soil, for which ratification by the U.S. Congress has been awaited for nearly two years in order for it to come into effect.
Otherwise, Croatia signed the Convention on Avoiding Double Taxation and Preventing Tax Evasion with the U.S. at the end of 2022, which should enable entrepreneurs from both countries to conduct business more easily and profitably and encourage new investments. However, as we have previously reported in Lider, the Convention must first be ratified by the U.S. Congress, and then the Government of the Republic of Croatia and the Croatian Parliament must adopt and enact the Law on the Ratification of the Convention.
Ratification can take up to ten years, Rayes noted, but her priority is the elimination of double taxation, emphasizing that she is discussing this with representatives of the business community in the U.S. as well as with U.S. senators.
– There is a willingness for ratification on the U.S. side; it just needs to be prioritized. I know I have high hopes, but we must work diligently and do our best to achieve this. Double taxation harms small companies, while large companies have subsidiaries in other countries, which is fine. However, small companies are affected, and that is unacceptable, so my priority is to eliminate double taxation – the ambassador added, concluding that ‘no one wants to be double taxed’.
Significant trading partner
Regarding trade between Croatia and the U.S., Croatian exports to the U.S. have doubled over the past decade, reaching an incredible $900 million in 2023, while U.S. exports to Croatia tripled during the same period to one billion dollars, Rayes reported. Additionally, in just the past decade, Croatian companies have announced nine greenfield projects in the U.S. worth nearly $50 million.
There are many opportunities for U.S. companies to invest in Croatia, especially in the energy and pharmaceutical industries, so Rayes hopes to officially announce some of them soon. Also, since Croatia is visited by 700,000 American tourists annually, she would like to see direct flights from Croatia to the U.S. year-round, not just from Dubrovnik and Split during the summer season, but also from Zagreb, to increase the number of tourists even further.
By removing the last obstacle – double taxation – cooperation between the two countries could be even stronger, so the ambassador announced a visit from a trade delegation from Los Angeles to Croatia in November, including representatives from the local chamber of commerce and the Port of Los Angeles, the largest in North America, to share their best practices in renewable energy with Croatia.
The U.S. is among the top ten most significant export markets for Croatia and the eleventh most significant trading partner overall, noted Luka Burilović, president of the Croatian Chamber of Commerce.
– The elimination of visas for U.S. entry for holders of Croatian passports was a significant step in strengthening bilateral relations; however, we are still waiting for the elimination of double taxation. The agreement was signed nearly two years ago, and with its coming into effect, we expect a reduction in business and administrative costs and an increase in direct investments, especially in the IT sector – Burilović stated.
