ZAGREB, Nov 30 (Hina) - The Croatian government on Thursday sent a package of four tax bills - a general tax bill, bills on income and profit tax, and a bill on tax counselling into parliamentary procedure for the final confirmation.
Also sent into parliamentary procedure for the final confirmation was a bill on the audit of ownership transformation and privatisation. Between two parliamentary readings, the bills on income and profit tax have experienced significant changes. The bill on profit tax envisages a reduction of the profit tax rate from 35 to 20 percent instead of the initially proposed 25 percent. With the exception of Hungary, which has a profit tax rate of 18 percent, Croatia would have the lowest tax rate in Europe, says Finance Minister Mato Crkvenac. The government also proposes the complete annulment of the protective interest rate, which was introduced in 1994, but has not, Crkvenac says, yielded the ex
ZAGREB, Nov 30 (Hina) - The Croatian government on Thursday sent a
package of four tax bills - a general tax bill, bills on income and
profit tax, and a bill on tax counselling into parliamentary
procedure for the final confirmation.
Also sent into parliamentary procedure for the final confirmation
was a bill on the audit of ownership transformation and
privatisation.
Between two parliamentary readings, the bills on income and profit
tax have experienced significant changes.
The bill on profit tax envisages a reduction of the profit tax rate
from 35 to 20 percent instead of the initially proposed 25 percent.
With the exception of Hungary, which has a profit tax rate of 18
percent, Croatia would have the lowest tax rate in Europe, says
Finance Minister Mato Crkvenac.
The government also proposes the complete annulment of the
protective interest rate, which was introduced in 1994, but has
not, Crkvenac says, yielded the expected results and stimulated
investments and employment.
The protective interest rate should have secured and increased the
capital of companies, but in the past six years its value remained
almost unchanged, at 192 billion kuna, the finance minister said.
Meanwhile, the companies were transferring tax losses from year to
year and at the end of this year they amount to more than 150 billion
kuna. The protective interest rate enabled the payment of dividends
and shares although the companies suffered tax losses. This made
sucking money out of companies without paying profit taxes
possible, which, Crkvenac believes, constitutes a form of money-
laundering.
Another novelty in the bill is that, apart from investments in
equipment, tax exemption also refers to investments into
production facilities, and the bill also envisages no taxes on
interest rates on foreign bank and tied loans.
The most important change in the income tax bill is that life
insurance premiums and additional health and voluntary pension
insurance amounting to up to 1,000 kuna per month would be treated
as tax benefits. This, Crkvenac says, would create conditions for
the further reduction of obligatory contributions and the cost of
labour as early as of next year.
No form of saving nor interest income would be taxed and the plan for
citizens to report their property would also be given up. However,
there would be no giving up on the proposal that every buyer must
declare the source of every purchase so that the state could have
clear records about the citizens' property in the future, on the
basis of which it would be possible to establish whether someone has
paid taxes on all incomes.
On the other hand, the bill will keep a 15 percent tax rate on
dividends. However, this does not discourage the capital market and
does not mean that shareholders will receive smaller dividends,
because decreasing profit taxes by 20 percent would leave the
companies with higher profits and they would accordingly have the
possibility to give higher dividends, Crkvenac said.
Justice Minister Stjepan Ivanisevic believes, however, that with
this bill the Finance Ministry has obtained a more favourable
position in relation to other bodies of state administration and
that the law is not adjusted to the legislative system.
Crkvenac dismissed the objection, claiming that financial
operations are specific and that some controversial regulations
are aimed at preventing the "grey economy" and enabling a better
collection of tax revenues.
The government today sent into parliamentary procedure a bill on
the audit of ownership transformation and privatisation, which
would be carried out by the State Audit Office.
The Minister of Environmental Protection Bozo Kovacevic and
European Integration Minister Ivan Jakovcic distanced themselves
from the bill on the audit of ownership transformation and
privatisation recently proposed by MPs Damir Kajin of the Istrian
Democratic Assembly (IDS) and Zlatko Kramaric of the Liberal Party
(LS). These bills were not proposed by the two parties but by
individual deputies, the parties' leaders Kovacevic and Jakovcic
said. Jakovcic added that Kajin and Kramaric had withdrawn the bill
from parliamentary procedure.
(hina) rml . ,