Prime Minister Andrej Plenkovic said on Sunday that he was not concerned about recent criticism from his coalition partners regarding the proposed tax reform, adding that there is enough time for the ruling coalition to hammer out the reform.

“Only a small segment of the legislation – regarding (salary) contributions – has come into focus, and the reform should be looked at as a whole,” Plenkovic told reporters in Barban, Istria.

The intention of the proposed reform is to ease the tax burden on citizens and the economy in the amount of 6 billion kuna (€810 million), he added.

The government-sponsored bills on tax reform have been put to public discussion. Plenkovic said that there was no need to hurry with the new legislation, and there was enough time for partners in the ruling coalition to fine-tune the proposal.

The liberal Croatian People’s Party (HNS), a junior partner in the ruling coalition, on Saturday criticised one of the provisions of the new bill which plans to legally increase the minimum salary of company CEOs, whereby contributions paid to the state out of gross salary sums would also rise.

The HNS said they would make its own proposals to amend the bill, which they said encourages an “anti-entrepreneurial climate” in its current form.

Meanwhile, Finance Minister Zdravko Maric said on Saturday a bill of amendments to the law on contributions was aimed at preventing abuse observed in recent years – with many CEOs of private owned companies reportedly earning minimum wage and working part time – and that the changes proposed would not apply to company board members and executives who are permanently employed and work full time.

The bill would also bring no changes for small and medium-sized businesses, Maric added.

“There are some 175,000 board members today in the country – directors of various sorts of companies – and only 460 of them are reported as board members, yet they are not employed by the company in question. And about 65,000 are legally employed by the company,” Maric said.

“The remaining 100,000 are board members and directors who have full pension and health insurance benefits, but these are based on their employment at some other business,” he added.

Commenting on criticism that the bill is anti-business, Maric said that the incumbent government had done a lot for entrepreneurs, including a cut in profit tax from 20 to 18 percent, and 12 percent for small and medium-sized businesses. He also added that the new bill was drawn up to encourage IT engineers to stay in Croatia, as well as attract international experts.

“Under the new bill, when a business owner pays a board member or employee a bonus in the form of profit-sharing or equity, this kind of income will no longer be taxed as salary income, but capital income,” Maric said.

(€1 = 7.41 kuna)

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