ZAGREB, Aug. 2 (Xinhua) -- Croatia will implement a series of tax reform measures as of January 2019 in an effort to boost the economy and qualify for the introduction of euro, according to a document presented at a cabinet session on Thursday.
The Economic and Fiscal Policy Guidelines for 2019-2021 was presented by Finance Minister Zdravko Maric at the last session of the Croatian government before the summer break.
According to the guidelines, income tax rate for employees earning more than 17,500 kuna (2,700 U.S. dollars) a month will be reduced from 36 percent to 24 percent, while people earning over 30,000 kuna (4,700 U.S. dollars) monthly will be applicable to 36 percent income tax rate.
Meanwhile, value-added tax (VAT) will be reduced from 25 to 13 percent for fresh meat, fish, fruit, vegetables and baby diapers, and contribution to employment and labor injuries will be abolished.
Investors will also enjoy many benefits from the tax reform in the payroll system, and the Croatian government predicts that it will facilitate business for numerous foreign companies in Croatia.
The document predicts that Croatia's state budget revenues for 2019 will reach 134.2 billion kuna (21 billion U.S. dollars), while expenditures are expected at HRK 139 billion (21.8 billion U.S. dollars). The Finance Minister said that the government expected the GDP to grow 2.8 percent this year, and to slow to 2.7 percent in 2019 and to 2.5 percent in the following two years.
With the predicted public debt to GDP ratio standing at over 70 percent this year, the southeastern European country may need several more years before it meets one of the most important qualifications for adopting the euro.
The package of measures on these reforms are open to public opinions for two or three weeks in mid-August before they undergo parliamentary readings in September and take effect on January 1 next year, said the minister.