Finance Minister Zdravko Maric said on Tuesday that Croatia supports the current proposal to tax multinational companies in order to achieve greater tax fairness.

Maric made the statement while speaking to the press in Paris, where today and on Wednesday the second part of a ministerial meeting of the Organisation for Economic Cooperation and Development (OECD) Council is taking place. Apart from Marić, the Croatian delegation also includes Economy and Sustainable Development Minister Tomislav Coric and Foreign Minister Gordan Grlic-Radman.

130 countries gathered around an initiative to prevent tax base erosion have accepted, under the leadership of the OECD and G20, the proposal to introduce a global tax rate for big multinational companies of at least 15%.

Estonia, Hungary and Ireland are among the few countries that have still not endorsed this agreement but Ireland said recently that it would probably do so. Ireland taxes corporate profit at a rate of only 12.5%, which is what has attracted giants like Google, Facebook and Apple to that country.

Maric said Croatia had from the start been in favor of a global systematic solution that would be incorporated into European legislation, including Croatia’s.

The current proposal rests on two pillars, the first being that multinational companies operating in more than one country would transfer a portion of their profit as residual profit, which would enable the countries where they operate to obtain some of it.

Maric believes that from the point of view of taxation or any other point of view, this would result in greater tax fairness. Countries where such companies are based mostly do not support the proposal but they are now in a minority, he said.

The first pillar would mean a better situation for Croatia because it would be able to collect some of the tax from multinational companies, he said.

The second pillar has to do with the current proposal for a tax rate of at least 15%, with Maric recalling that Croatia has profit tax rates of 10% (paid by companies with revenue of up to HRK 7.5 million) and 18% (paid by companies with revenue above HRK 7.5 million), with 90% of the businesses paying the 10% profit tax rate.

However, the largest portion of the profit tax comes from those that pay it at a rate of 18% so Croatia’s weighted average rate is above 15%, Maric said, adding that with regard to the second pillar and “as far as Croatia is concerned, there should be no problems whatsoever.”

The minister noted that he could not comment in greater detail on the financial and fiscal effects before the final solution but that both proposals were aimed at achieving a more just, clear and transparent system.

Croatia working on meeting criteria so it could join OECD

Maric told reporters that this was the second time Croatia had been invited to take part in an OECD ministerial meeting, recalling that the OECD has 38 member states and that Croatia is one of the countries aspiring to join it.

“The process is underway, we have been working to meet the numerous criteria so that one day we could join the club,” he said.

In addition to discussing the taxation of digital companies, the two-day OECD meeting will also discuss the green and climate neutral economy, and the discussions will be attended by Minister Coric while Minister Grlic-Radman will participate in talks on liberalisation and other issues related to international trade.