Plenković announces taxation of excessive gross margins

On Wednesday the Croatian Prime Minister outlined some of the details of the package of government’s anti-inflation measures that will be presented at Thursday’s cabinet session. This includes the taxation of excessive gross margins and raising the lump sums related to short-term rentals.

Speaking about government’s package of anti-inflation measures, Prime Minister Andrej Plenković pointed out that the ruling coalition had given it their support and that it contains several structural elements, the first of which is budgetary discipline. He stressed that there are no new, unforeseen expenditures that would call into question what was planned in the state budget at the beginning of the year.

Plenković said that he expects all stakeholders to understand the context in which the government is acting to alleviate inflationary pressures, which have recently been mainly caused by the rise in energy prices due to the war in the Middle East, but also by certain internal factors that the government will act on.

“The context to which this applies is also certain changes in the law, for example the profit tax. So, the tax on gross margins, and excessive margins, because the analysis showed certain deviations that go beyond what would be logical and normal business with an appropriate profit. In some places, such deviations are too large. Therefore, we would proceed with changes that would allow us to tax such situations. We also have several other aspects, primarily self-employment, which has been increasing significantly in the last few years, where tax-deductible expenses are as much as 85 percent,” Plenković said.

He added that this leads to an imbalance and an unequal tax position in relation to dependent activities that have higher contributions. He pointed out that this measure was initially introduced as support during a period of high unemployment, but that now there has been an imbalance that needs to be corrected.

“It is also about increasing the flat rate, that is, the lower threshold regarding short-term rent, for which we leave the delegated authority to the local self-government units to determine this, but we think that this flat rate is simply too low and that it should be increased, which will also contribute to the reduction of inflationary pressures,” Plenković said.

He also announced the abolition of income tax on pensions, evaluating it as a great step forward in improving the standards of pensioners. He added that the beneficiaries of the package of anti-inflationary measures should be all citizens, in order to alleviate the pressure of rising prices.

Source: HRT