The Croatian Employers' Association (HUP) said on Wednesday it is opposed to an additional profit tax on industries outside the energy sector, warning that the economy is struggling to survive with soaring energy prices and inflation, and the tax would be potentially disastrous for the economy.

According to unofficial sources, the government plans to introduce an additional profit tax in line with the RePowerEU programme and related directives, HUP said in a press release.

However, unlike most EU countries and the European Commission, which proposes taxing the energy sector, the Croatian government is not planning to apply this directive to energy companies that made money from speculative gas and electricity prices, but to all companies that generate more than HRK 60 million in annual income.

HUP said further that the government plans to calculate the average profit in the last four financial years, from 2018 to 2021, and compare it with the profit in 2022. All profits that are 20% higher than the average increase will be placed in the tax rate bracket of 33%.

“HUP is categorically against any additional tax burden. At the moment, we see the introduction of a new profit tax that will be applied to industries outside of energy as an additional pressure on the economy, which is already operating in difficult conditions. We think there is no need to increase the tax burden or further complicate the tax system. The introduction of this tax will certainly halt investment and prevent further wage growth. That’s why we are appealing to the government to give up this intention and continue talks with businesses on measures to overcome the crisis”, HUP Director General Irena Weber said.