Parliamentary Finance Committee endorses tax reform package

Zagreb - The parliamentary Finance Committee on Monday adopted a set of tax reform bills, with an abstained vote by the Social Democratic Party (SDP).

Finance Minister Zdravko Marić presented the main aspects of the reform during which he did not reject the possibility of lowering the overall Value Added Tax (VAT) rate, even though this has not been envisaged for the time being.

Marić underscored that local government units would be compensated for the the effects of changes to income tax, which is the direct source of income for local and regional government units, and announced that changes to the law on financing local government units would be made soon.

"Local government units will be able to base their 2017 budgets on income tax revenue collected in 2016 and the central government will directly compensate part of the sources as a transitional solution," he said.

Responding to criticism that the tax fraud office is to be incorporated in the Tax Administration and not the Finance Ministry, Marić said that this was being done with the aim of rendering the Tax Administration to be at the service of citizens and entrepreneurs.

He also reflected on writing off bad loans by banks. "As a one-off measure in 2017 we are offering credit institutions the possibility to write-off bad loans as a tax deduction," Maric said. He added that this could be applied only if the entire debt is to be finally written-off and that this would be beneficial to both credit institutions but also to debtors, that is Croatian citizens and entrepreneurs.

The tax reform package is to be on the parliament's agenda on Tuesday. (Hina)

Author: Hina