The American Chamber of Commerce in Croatia has been advocating for the reduction of the tax burden and the predictability of tax regulations for years. The announcement of the introduction of a new additional income tax goes against the positive results that the Republic of Croatia has achieved through several rounds of tax reform, counteracts the efforts of the Croatian Government dedicated to achieving tax certainty and predictability, and jeopardizes Croatia’s position as an investment destination.

The context which led to the Government’s discussions on the introduction of a tax on windfall profits, which would help regulate speculative energy prices, is understandable, however, introducing a windfall tax for the industries outside the energy sector is contrary to the recommendations of the European Commission, and no EU countries have adopted such a proposal in practice, except for Hungary.

AmCham believes that the private sector has already faced market shocks this year due to historically high inflation, increasing costs of raw materials and energy, and the adjustment of business operations to the introduction of the euro. The introduction of new taxes which financially impact the economy at the end of the year for the current year, will not, therefore, result in a just distribution of the burden caused by the energy crisis but in serious negative consequences for businesses and the economy. A windfall tax would limit the possibility of the necessary salary increase in the private sector, resulting in lower disposable incomes and, consequently, personal spending and reduced economic activity.

Moreover, AmCham would like to point out that the introduction of this tax, i.e., the taxation criteria, may be interpreted as discrimination of medium and large companies and an attempt to penalize successful companies which significantly contribute to the growth of Croatian GDP.