The latest figures show that in Croatia over 21,000 employers are not paying contributions for a total of 121,000 workers, or about 80 million kuna monthly.
Finance Minister Slavko Linic said that such practice was causing great damage to the workers, who would be having problems receiving their pensions, and was also creating an unfair competition and undermining the system of collection of budget revenues.
The regulation defines the method of payment of contributions as well as steps to be taken by the Tax Administration when irregularities are found. The Tax Administration will draw up lists of employers that have not been paying contributions for the last two months or have been paying wages without submitting payment forms, and will submit those lists to commercial banks.
Employers who attempt to pay wages without paying contributions or who fail to submit a wage payment order will have their bank account blocked by the Tax Administration and will not be able to make any further payments until they have paid the wages and contributions in question.
Economy Minister Radimir Cacic said that the regulation was "very tough", adding that its purpose was to stabilise the rule of law and the tax system and to get rid of disorder and the grey economy, which he said was to a great extent the result of transition.
"This disorder also acts as a social shock absorber that makes it possible for people to buy themselves bread in a non-functioning state," Cacic said, stressing that therefore it was the government's absolute priority to launch an economic cycle. "We must show our ability to launch investment projects, because if we only have restrictions, our economy will die," he added.