The Croatian Employers’ Association (HUP) continuously insists on tax relief for labor and tax fairness, and therefore the tax change plan presented by the Government is a step in the right direction, HUP emphasized in a comment on the new round of tax reform.
The proposal for a new round of tax reform, presented on Monday, includes, among other things, higher taxation of properties that are not used for permanent residence or long-term rental, the continuation of tax relief on income, as well as tax incentives for the return of emigrants.
The changes are expected to come into effect on January 1 of next year, with amendments and supplements to six laws being sent for public consultation – on local taxes, income tax, contributions, the General Tax Law, the Tax Administration Act, and the Value Added Tax Act.
Still High Taxation of Labor
HUP notes that Croatia still has a high tax wedge on income earned from work, so raising the personal deduction and lowering income tax rates is a tax policy that should continue.
Raising the threshold for applying the higher income tax rate, as emphasized by HUP, ‘will enable more competitive salaries for professionals in higher value-added industries, such as doctors, scientists, ICT professionals, and a number of other employees who contribute not only to their companies but to society as a whole and whom we want to retain in our labor market.’
The tax wedge on salaries in Croatia is 42.3 percent and is rising, which confirms that this is only the first step and that we must constantly work on relieving labor, say the Employers’ Association.
