The American Chamber of Commerce in Croatia (AmCham) strongly supports the idea of further tax breaks in the Croatian economy, AmCham said on Wednesday, adding that tax reliefs would positively impact competitiveness in the short term and would protect the labour force.
A clear, predictable and stable taxation system and cooperation between tax authorities and the business community were the key to the functioning of economy, AmCham said in a press release.
“Further measures in administrative reliefs of the taxation system would save significant time and resources in companies, which would then have more time to deal with their core business,” they added.
AmCham said that his year, Croatia marks five years of membership of the EU, and, with regard to the economy, it is important to emphasise two related facts – a significant number of Croatia’s active labour force is leaving to work on competitive markets while, at the same time, Croatia is recording an economic growth accompanied by a growing demand for workers.
That has impacted the imbalance between supply and demand on the labour market, which is why it is urgent to secure a stimulating taxation framework that would enable keeping existing workers, but also to attract new workers and additional investments. Croatia is uncompetitive with regard to tax burdens on labour, particularly in the higher wage bracket.
That is one of the reasons why a large number of propulsive sectors in Croatia have a problem with a lack of personnel which is particularly visible in the ICT industry and tourism, AmCham said.
Raising the cap on salaries in the 24 percent tax bracket would have a positive impact on attracting investors, and would increase the inflow of investments with consideration of the cost of labour in Croatia, they added.
AmCham said revenue based on employee participation in programmes offering shares to workers should be treated the same as revenue that employees receive from private investments on the financial market (for example, taxing income from dividend and capital gains).
“Croatia’s economy is not growing fast enough compared to other countries in central and eastern Europe. Tax reliefs on labour would in the short-term positively impact competitiveness and retaining the labour force,” said AmCham’s director Andrea Doko Jelusic.
In Croatia, income tax and on contributions for compulsory insurance for participation in this type of programme is 5 to 6 times higher on average in Croatia than in Hungary or Slovakia for example.
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