As of January 1, the zero VAT rate on bread, milk, books, medicines, orthopaedic aids and cinema tickets will be replaced with a rate of five per cent, the Croatian parliament decided on Friday, amending the Value Added Tax Act by majority vote.
The law was amended to align it with European Union directives which do not allow a VAT rate below five per cent. As a result, the government expects to earn an additional HRK 1.3 billion.
Parliament also amended the Budget Act, which envisages a 45-day deadline in which the government can suspend the execution of certain expenditures because of new ones or new economic trends.
Also amended was the General Tax Act under which, regardless of when assets whose origin has not been proven have been acquired, the tax on said assets will be recoverable within six years of ascertaining the debt.
Parliament amended the law on aid to agriculture and rural development, aligning it with the EU agricultural policy and rules on the use of European agricultural funds.
The amendments regulate financing from the state budget in case the amount earmarked is lower than Croatia's share in the Common Agricultural Policy.
The amendments also define the production year and 2011 as the reference year for establishing the value of entitlements allocated from the national reserve in 2013.
The Croatian Agency for Payments in Agriculture, Fisheries and Rural Development has been accredited for direct payments with the EU system so that as of 1 July 2013, when Croatia joins the EU, funds can be drawn in accordance with EU legislation.
Parliament also adopted a law that will enable the state to rehabilitate in the next two years the public institutions which cannot service their liabilities, primarily in the health sector, where the debt is about HRK 5 billion.
Parliament ratified an agreement between the Croatian and US governments on the procurement and exchange of services.
MPs amended the law on the Office for the Suppression of Corruption and Organised Crime (USKOK) which gives USKOK jurisdiction in cases of bribery involving deputies, a criminal offense under the new penal code.
A bill of amendments to the law on the entitlements of Homeland War veterans and their families, which envisages the publication of a veterans' list, and a freedom of information bill were sent into a second reading.
Parliament will reconvene on Tuesday for a discussion on and the adoption of the 2013 budget.
