The Croatian Employers' Association (HUP) on Friday supported the government's efforts to reduce the tax burden on employers, but said there was still room for more significant tax breaks, particularly with regard to costs of doing business and overall labour costs.

“HUP welcomes the government’s effort to reduce the tax burden on employers and citizens, and after seeing the initial proposals, we consider that there is still more room for significant cuts of costs for employers considering the current situation on the labour market, as well as the need to improve the competitiveness of the economy as a whole,” HUP said in a press release.

In the coming period, through dialogue with the government and other social partners, HUP will seek additional measures to relieve the economy, they said.

At the same time, HUP will carefully watch out for announcements of additionally increasing contributions and surcharges.

“Through social dialogue, we will demand a clear spending plan for new funds and the use of current funds in the best possible way. We expect a clear implementation of the reform plan in each department and strong arguments for the introduction of additional surcharges,” HUP said.

The planned changes concerning VAT, income tax and contributions, presented on Thursday by Prime Minister Andrej Plenkovic and Finance Minister Zdravko Maric, would result in a relief of 2.7 billion kuna (€364.2 million).

The planned changes propose that the wage contribution of 0.5 percent for accidents at work and the 1.7 percent contribution for employment be rescinded and the contribution for health insurance increased from 15 to 16.5 percent.

In addition, VAT on fresh meat, fish, fruit, vegetables and nappies would be reduced from 25 percent to 13 percent as of 2019.

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