Prime Minister Andrej Plenkovic said on Friday work was under way on a tax reform in which cutting the 25 percent VAT by one percentage point would not be the only measure, but one of a set that would not put the state's budget revenues at risk.

Speaking at a conference of Croatian export businesses he congratulated the best export companies in the country and thanked them for contributing to Croatia’s exports in 2017, which were up 14 percent year-on-year to more than 14 billion kuna (€1.9 billion).

“These are very encouraging and great results, and I’m confident that you will continue to work on your output, your business plans, your skills and know-how, in order to increase your presence on the global market,” said Plenkovic.

He said that unlike the time before 2008 when the recession started, when the main driver of growth was excessive domestic demand, Croatia’s economy was now growing on sound foundations. “The rise of exports is one of the most important components of that growth, and we know that export-oriented societies create added value, jobs and competitive products,” he added.

In order to improve the ease of doing business, the government’s policy intends to focus on a more favourable, safer and more predictable business environment in order to raise the quality of exports, and on putting in place a more efficient public administration and justice system, Plenkovic said.

He announced that the announced tax reform would be prepared by the autumn months, and would come into force next year. He said that, in line with his party’s election campaign programme, the government would move to cut VAT to 24 percent.

“But that won’t be the only measure. It will be part of measures which won’t endanger the budget’s revenue side. On the contrary, we believe that the combination of various measures will facilitate better revenues, reducing the fiscal pressure on both taxpayers and enterprises. All these combined will make Croatian exporters more competitive. That’s why, in the coming period, we will see what can be done about the tax burden on salaries,” Plenkovic said.

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