The planned value added tax increase from 23 to 25 per cent would put Croatia among the countries in Europe with the highest VAT rate.
Hungary has the highest VAT rate in Europe, 27 per cent. Croatia's general VAT rate would rank it alongside Denmark, Sweden and Norway. Iceland's rate is 25.5 per cent.
The lowest VAT rate in the European Union, 15 per cent, is in force in Cyprus and Luxembourg. It is even lower in Switzerland, which is not in the EU, and amounts to eight per cent.
In most EU countries, the standard VAT rate ranges from 18 to 23 per cent. In Spain and Malta it is 18 per cent, in Germany and the Netherlands 19 percent, in France 19.6 per cent, while in Austria, Bulgaria, the Czech Republic, Estonia, Slovenia, Slovakia, and Great Britain it is 20 per cent.
Italy increased VAT from 20 to 21 per cent last September, which is also the rate in force in Belgium and Lithuania, while in Latvia it amounts to 22 per cent.
Five EU countries have a 23 per cent VAT rate - Greece, Ireland, Poland, Portugal and Finland. Romania's rate is 24 per cent.
The VAT in Bosnia and Herzegovina and Montenegro is 17 per cent, while in Serbia and Macedonia it is 18 per cent.
Alongside a general VAT rate, most European and other countries apply lower rates on certain goods such as food, drugs, books, newspapers and hospitality. These rates range from five to 13 per cent.
VAT was first introduced by France in 1958 and is currently in force in about 60 countries. Among the developed countries, only Australia and the US do not impose it.
In Croatia, VAT was imposed on 1 January 1998 at the rate of 22 per cent. It was increased by one per cent on 1 August 2009.