ZAGREB, Dec 7 (Hina) - Parliament's House of Representatives on Thursday wrapped up a debate on a general tax bill and a tax counselling bill, and resumed the session by debating bills on income and profit taxes. The elimination of a
protective interest rate and reducing tax from 35 to 20 percent are the basic aspects of the final profit tax bill, said Finance Minister Mato Crkvenac. Only one or two states in the world have the protective interest rate and foreign investors have no idea as to what it entails, he said, pointing out the said rate had failed to encourage either employment or investments, its objective. Moreover, the rate made it possible to drain money from companies tax-free. The reduction to 20 percent makes Croatia the state with the lowest profit tax apart from Hungary, which should increase the competitiveness of Croatia's economy and attract foreign investors, said the minister. The main new aspect in th
ZAGREB, Dec 7 (Hina) - Parliament's House of Representatives on
Thursday wrapped up a debate on a general tax bill and a tax
counselling bill, and resumed the session by debating bills on
income and profit taxes.
The elimination of a protective interest rate and reducing tax from
35 to 20 percent are the basic aspects of the final profit tax bill,
said Finance Minister Mato Crkvenac.
Only one or two states in the world have the protective interest
rate and foreign investors have no idea as to what it entails, he
said, pointing out the said rate had failed to encourage either
employment or investments, its objective. Moreover, the rate made
it possible to drain money from companies tax-free.
The reduction to 20 percent makes Croatia the state with the lowest
profit tax apart from Hungary, which should increase the
competitiveness of Croatia's economy and attract foreign
investors, said the minister.
The main new aspect in the income tax bill is the introduction of a
third rate so that there would be 15, 25 and 35 percent tax rates. No
form of saving and interest rate income will be taxed. The
government also abandoned the proposal of having citizens report
their assets themselves.
Life insurance premiums, additional health and voluntary
retirement insurance will be treated as tax reliefs. This should
provide conditions for further reducing compulsory contributions
and the price of labour in 2001, said Crkvenac.
The bench of the strongest opposition party, the Croatian
Democratic Union (HDZ), will not endorse the income and profit tax
bills as it believes they will discourage foreign investors and
make the tax system non-transparent. The party believes the effects
of tax changes are questionable, opposes the elimination of the
protective interest rate saying it will make many companies pay
higher taxes than before, and thinks the government should not have
given up on taxing reinvested profit.
The lower house today also wrapped up a debate on a final 2001 state
budget execution bill. The Opposition's criticism mainly referred
to a proposal to earmark 660 million kuna ($77.65 million) to units
of local self-government.
Those units are in dire financial straits and it is questionable if
that will be enough, says HDZ.
The finance minister conceded the units were in financial
difficulty but that it was inevitable in reforms and
decentralisation.
(hina) ha jn