Representatives of an initiative seeking a lower VAT rate on hairdressing services staged a rally on Thursday in St Mark's Square, demanding that the VAT rate on hairdressing services be reduced from 25 to 13 percent, and they submitted their analyses to the government.

One of the people behind the initiative, Ivica Pavlacic, who owns a hair salon in Karlovac, said that he hoped the government would consider their request to lower the VAT rate to 13 percent “so that the hairdressing profession could develop to its full potential.”

Pavlacic said that analyses had shown that reducing the VAT rate would be beneficial for the state budget and the hairdressing profession.

According to him, the biggest problem is that small salons, when they want to grow and employ new workers, automatically enter the VAT system, which increases their tax liabilities tenfold.

“That is the biggest problem because those salons then do not want to grow and create new jobs,” Pavlacic said.

He also presented data from the initiative’s analysis and information received from the Tax Administration, which show that a very small number of hair salons — about 340 out of a total of 4,830, or fewer than seven percent — are in the VAT system.

The Entrepreneurs’ Voice association supported the hairdressers’ demonstration, and its head, Hrvoje Bujas, reiterated that they had been suggesting for months a reduction in VAT in general, especially for hairdressers, but also for all other services.

At the beginning of September, hairdressers launched the initiative for introducing a lower VAT rate of 13% on hairdressing activities, claiming that that would motivate more hair salons to expand their business and enter the VAT system, which would in the long term benefit both the state budget and the profession.