This is when amendments to the VAT Act, Cash Register Fiscalisation Act, Income Tax Act and Postal Services Act come into force.

Amendments to the VAT Act will bring the relevant Croatian legislation into line with EU directives.

It is yet to be seen whether the new 5% VAT on products will lead to a price increase as some retail chains have announced that they would not raise their prices.

Other amendments by which VAT will be reduced in hospitality services will now include all services in this branch.

Hospitality businesses though will be the first to become obliged under the new cash register fiscalisation which should facilitate better monitoring by the Finance Ministry in an effort to combat the grey economy.

The fiscalisation act will be introduced in three phases, and hospitality and medium large retailers are covered in the first stage.

Businesses will have to apply electronic cash registers with the appropriate software to support digital signatures and electronic connections with the Tax Administration.

The second phase which comes into force April 1 will include all retailers and freelances and the final phase will incorporate all other businesses as of July 1.

The Finance Ministry estimates that the introduction of fiscalisation will pour in about half a billion kuna into the state budget next year and more than a billion kuna each year after that.

Amendments to the tax law will do away with taxes for all profits re-invested into the founding capital of a company.

Excises on luxury items will cease to apply as of 1 January including jewellery, watches, fur and crocodile skin clothing and footwear, fireworks and weapons. The budget gained very little from this taxation and once Croatia enters the European Union citizens will be able to purchase these products in neighbouring countries which means that Croatia would not receive VAT on these items.