As of 13 August 2026, the Croatian Ministry of Finance has inaugurated a formal public consultation phase on its e-Savjetovanje digital platform concerning a draft proposal for amendments and supplements to the Income Tax Act (Zakon o porezu na dohodak). This consultative procedure constitutes a core element of the Ministry’s regulatory governance cycle, mandated by the Public Participation in Rulemaking Act and the Budget and Fiscal Stability Framework, aiming to synchronize domestic fiscal policy with the latest European Union tax coordination standards, including the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) recommendations, specifically Pillar One regarding tax allocation rights for market jurisdictions and Pillar Two establishing a global minimum corporate tax rate of 15 percent. The consultation window, open for a 30-day period commencing on the publication date in the Official Gazette of the Republic of Croatia, invites written submissions from legal persons, registered tax advisors, business associations, and individual entrepreneurs. The proposed amendment package reportedly encompasses revisions to the corporate income tax rate structure, modifications to the deductibility criteria for interest expenses under the arm’s-length principle, enhanced documentation requirements for transfer pricing analyses, and the introduction of anti-abuse General Anti-Abuse Rules (GAAR) calibrated to the minimum tax thresholds established under Pillar Two of the BEPS project. Furthermore, the draft explores the feasibility of permitting fiscal consolidation for qualifying groups of companies, tightening General Anti-Avoidance Rules, and clarifying the VAT treatment of intermediary services. All submissions will be reviewed by the Ministry’s Legislation Department, with due consideration given to proportionality, administrative feasibility, and the impact on the national tax revenue base. The final adoption of the amended Income Tax Act is anticipated during the 2026 autumn parliamentary session, with the revised provisions expected to take effect for taxation periods commencing on or after 1 January 2027, subject to any legislative adjustments arising from the consultation feedback. Failure to participate within the stipulated deadline will result in the closure of the consultation phase, with the draft proceeding to governmental deliberation based solely on the Ministry’s internal assessment, thereby excluding post-consultation stakeholder objections from subsequent judicial review proceedings concerning the lawfulness of the amended provisions.
Key Takeaways
- The proposed amendments introduce a tiered corporate income tax rate structure, offering a reduced 12 percent rate for qualifying SMEs while maintaining the standard 18 percent rate for larger profit-making entities, thereby incentivizing formal sector formalization and formal employment growth.
- Enhanced transfer pricing documentation requirements and the codification of a General Anti-Abuse Rule calibrated to the Pillar Two minimum tax threshold aim to close fiscal erosion avenues and bring Croatian transfer pricing practices into alignment with OECD minimum standards effective from 2025.
- The exploration of fiscal consolidation and the 30 percent EBITDA ratio test for interest deduction limitation directly impact multinational enterprise tax planning strategies, requiring revised compliance workflows and potential restructuring of intra-group financing arrangements to maintain deductibility under the new regime.
Disclaimer:This article is compiled and summarized based on publicly available information and is for general information and academic exchange purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. For tax planning, please consult a qualified professional tax advisor or legal counsel.
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