The Tax Administration of the Ministry of Finance has reacted to what they describe as “a series of completely incorrect interpretations of the amendments to the General Tax Law (GTL), primarily emphasizing that the information that these changes introduce ‘personal liability for all members of capital companies for tax obligations’ is inaccurate.
Namely, the Focus party criticized the amendments to this law that will come into effect at the beginning of 2025, ‘whereby the ruling party introduces personal liability for owners of capital companies (j.d.o.o., d.o.o., and d.d.) for the tax obligations of the companies in which they hold ownership shares’, and similar criticisms were voiced by Hrvoje Bujas, a long-time entrepreneur and former president of the Association Voice of Entrepreneurs.
The Tax Administration states that the aforementioned information misleads citizens and entrepreneurs, as ‘the interpretation of the legal changes and their consequences is based on isolating one legal provision that is interpreted independently of other provisions of the law, in this case, the GTL’.
– We emphasize that the implementation of the tax procedure is based on the principle of self-assessment, i.e., the submission of tax returns, whereby the tax authority intervenes only if the obligation is not fulfilled, applying all other legal provisions regarding the obligation to inform taxpayers and calling for the fulfillment of tax obligations. The previous practice of implementing provisions on the responsibility of company members has not led to ‘loss of investments and innovations’ but rather to the establishment of financial discipline,’ stated the Tax Administration.
The responsibility of company members for failing to submit annual reports has existed since 2012.
Ultimately, they also noted that these are amendments to the GTL, for which a public consultation process lasting 30 days was conducted, in which all stakeholders could participate, along with two readings in the Croatian Parliament. Furthermore, the interpretation of the Tax Administration in this specific case was not requested, which, if the goal is an objective representation and analysis, would be standard and correct conduct, the Tax Administration states.
In a statement published on their website, they further elaborate on the most important elements, the goal, and the method of application of the mentioned amendments to the GTL, specifically Article 32.a related to the responsibility for failing to submit returns, and state that the responsibility of company members for failing to submit prescribed annual reports has existed since 2012, and with this year’s amendments to the GTL, the responsibility for failing to submit tax returns is separated from the existing provision of Article 31 (paragraph 3) of the GTL into a separate article (32.a of the GTL) in order to clarify the procedure and exclude any arbitrary interpretation of the existing provision.
They also emphasize that the responsibility of company members for failing to submit tax returns does not arise on its own, automatically, and it is not possible to interpret that personal property will be endangered due to business difficulties.
– In conclusion, we reiterate that this is not about introducing new liability but about clarifying existing liability, which, according to current provisions, is only applied exceptionally and in exhaustively listed cases. All changes in the implementation of tax procedures are aimed at efficient implementation and strengthening financial discipline, with provisions that should act as a deterrent to undesirable behavior of taxpayers,’ conclude the Tax Administration.
