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Photograph: Photo by Mario Fajt, used under CC BY

The American Chamber of Commerce in Croatia  (AmCham) on Monday proposed a series of measures to improve the economy's competitiveness through tax reforms.

The Croatian taxation system is characterised by sudden and frequent changes that lead to instability and unpredictability in the business environment, a press statement from AmCham says pointing out the importance of improving the quality of tax legislation.

The costs of introducing sudden and insufficiently prepared amendments to legislation are high and limit business development because part of the resources are engaged in adapting internal procedures to tax changes instead of focusing on market competition, AmCham says.

AmCham has proposed a series of measures to make doing business on the Croatian market easier. It believes that Croatia is uncompetitive with regard to tax relief particularly in the segment of higher salaries which pay the highest tax rate of 40%, which, AmCham claims, leads to a lack of qualified ICT staff and in other propulsive sectors.

AmCham president Berislav Horvat believes that it is necessary to abolish that tax bracket or to drastically increase the threshold for the 40% tax rate. That would increase pays, consumption and revenue from Value Added Tax (VAT) and would partially curb the population drain and would help Croatia to become the regional centre for a series of modern industries.

AmCham among else proposes that reinvesting should be made available to those companies that increase the number of employees and not just those companies that have invested in material assets.

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