The Croatian government on Wednesday tabled a bill lowering Value Added Tax on the supply of wood chips, wood pellets and firewood to 5% and envisaging a zero VAT rate for solar panels.

Finance Minister Marko Primorac said the draft bill proposed changes to provisions related to euro introduction as well as further tax breaks to make it easer for the enterprise sector and households to cope with rising prices.

Thus, VAT on the supply of heating from heating stations and the supply of firewood, wood pellets, wood chips and wood briquettes will be reduced to 5%.

The lower VAT rate will be charged in the period from the entry into force of the bill until 31 March 2023.

Also a zero VAT rate is proposed for the supply and installment of solar panels on private housing units and public buildings.

The minister explained that this rate would apply to end-users and their energy communities, that is, apartment buildings, and to persons carrying out activities of general interest.

This paves the way for lowering the prices as an incentive for the use of renewables, said Primorac.

The lowered VAT rates will reduce the annual budget revenue by about 120 million kuna.