Enterprises need good rules and conditions to operate as well as tax and legal certainty and a state which does not penalise but assists those financing it, Croatian Employers Association (HUP) director-general Irena Weber said on Wednesday at the HUP's traditional New Year's meeting.

She was referring to the introduction of an additional profit tax for this year.

Speaking about of the past year, Weber said the HUP had commended the government’s moves which stimulated and facilitated doing business.

“We are solidary, and the government, of course, must adopt tax regulations, but what bothers us is the uncertainty, insecurity and total change of the rules of the game,” she said, adding that 2023 would be a difficult year and 2024 likely too.

She said 2023 would be a year for enterprises which could “seek solutions, push the economy forward, create opportunities for progress and resist all challenges.” That requires support from a system which facilitates success, not slows it down, and a climate which encourages excellence, not contests it, she added.

Enterprises, Weber said, “need a stable and just legal and tax system.”

HUP president Mihael Furjan, too, said business needed a system which did not hamper them, adding that next year “will probably be the most uncertain one for us all, at least in the last 20, 30 years.”

The current situation with energy, food and raw material prices is untenable in the long term, he said, adding that prices have started decreasing on world markets.

He is confident the situation will calm down, but said it was a very slow process and that stagflation was likely.

Furjan said introducing an extra profit tax was very bad for Croatia’s image as an investment destination in the long term as well as discriminatory towards some big enterprises. “It probably would have been better if everyone’s tax rate had been raised by 2% in the short term.”

He said many businesses that felt affected would file constitutional complaints, and that the money collected from that tax “will be significantly under HRK 2 billion.”

HUP chief economist Hrvoje Stipic said he expected increased uncertainty in 2023 and inflation, expected to be 11% this year, to drop to an average 7% or 8%.