American Chamber of Commerce in Croatia (AmCham) organized the fifth edition of the conference "Sustainable Tax System: Policy, Practice, and Perspectives". The conference discussed potential measures aimed at further reducing the tax burden on labor, simplifying business administration, and digitalizing the system, as well as tax incentives in the context of research and development.

AmCham presented its "Recommendations for the Tax System Reform in 2025". Key recommendations in the context of income tax include the following: 

• Increasing the personal deduction to EUR 970, and reducing the tax rate from 20% to 10% and from 30% to 20%.
• Limiting health insurance contributions (to 6 average salaries, the same as for the pension system).

In the context of corporate income tax, the recommendations are focused on the following: 

• Introduction of tax relief based on salary costs
• Proposal to improve incentives for investment in research and development
• Widening the scope of the exemption from taxation of income derived from investments in subsidiaries

"American Chamber of Commerce in Croatia welcomes the efforts made so far by the Government of Croatia and the relevant institutions in implementing tax reforms, which in recent years have led to significant progress in reducing the burden on labor and entrepreneurship", said Andrea Doko Jelušić and added that "given the challenges posed by shifting global economic trends, inflation, and the need to retain and attract qualified workforce, there is room for further improvement of the tax system." 

"A sustainable tax system is the key component of economic policy that balances necessary public revenues with social and environmental goals. It is important to note that the policy of a sustainable tax system, through tax reforms, ensures a fair distribution of the tax burden, encourages environmentally friendly activities, and reduces social inequalities. The prospects of a sustainable tax system depend on global and local challenges, while changes and the development of the tax system ensure economic growth and social justice. Alongside changes that reduce the tax burden in order to achieve a fair system, comprehensive digitalization of business processes will significantly reduce the administrative burden for all participants in the taxation process. Further to the above, it is important to mention the project "Fiscalization 2.0", as the annual savings in administrative burden for entrepreneurs, resulting from, among other thing, the reduction of the number of forms, are estimated to more than EUR 120 million", said the Deputy Prime Minister and Minister of Finance, Marko Primorac.

After the Deputy Prime Minister's speech, Vladimir Nol, a partner from Forvis Mazars, presented AmCham's tax recommendations for 2025 entitled "Income Tax and Mandatory Contributions – A Comparative Analysis of Comparable Countries".

"In terms of personal income tax and mandatory contributions, Croatia has for years been considered an expensive country with relatively high levies, but this has significantly improved through several rounds of tax reform. At first this may not be immediately apparent due to our relatively high nominal rates, but once we delve into the tax calculations, it becomes clear that our tax wedge is not that bad, especially in comparison with Central and Eastern European countries. But that doesn’t mean our business is done, and AmCham has its recommendations this year as well, among which I would highlight limiting the contribution base for health insurance, further reducing personal income tax rates, and tax relief for healthcare expenses", said Vladimir Nol.

Krešimir Lipovšćak, a partner from Crowe Croatia presented AmCham's recommendations in the presentation "Corporate Income Tax – Enhancing Investment". 

"Incentives for investment in research and development are key to promoting growth and competitiveness of the Croatian economy. In order for Croatia to attract more investment and stimulate innovation, it is essential to improve the existing incentive system through more competitive measures focused on research and development.
Such an approach would increase the attractiveness of the business environment, ensure the long-term sustainability of investments, and create room for the development of innovative solutions that could position Croatia as a regional leader", said Krešimir Lipovšćak.

A panel discussion "Tax Strategy for a More Competitive Economy" followed. The participants were: Božidar Kutleša, Director of the Tax Administration; Tomislav Mesić, Member of the Management board and CFO at Ledo plus and Ralph Rogobete, Government Affairs and Policy Manager for Romania and Croatia at Mastercard. The panelists discussed how tax policy can become a powerful tool for strengthening Croatia’s competitiveness and creating a favorable environment for economic growth and development.