UGP: Food production in Croatia is dying! Manufacturers demand a single VAT rate of 5%

The Voice of Entrepreneurs Association (UGP), the Association of Croatian Small Dairy Farmers, the Association of Pag Cheese Producers, and the Group of Meat Industries expressed their...

Author  HrTurizam.hr

23. May 2023.

The Voice of Entrepreneurs Association (UGP), the Association of Croatian Small Dairies, the Association of Pag Cheese Producers, and the Group of Meat Industries expressed their dissatisfaction with the excessively high tax rates on products that are an indispensable part of every citizen's diet.

High VAT rates on food adversely affect the business of many producers of the dairy and meat industry and significantly threaten it  their competitiveness on the domestic and foreign markets. And thus also on sustainable tourism, which must use local resources, which are becoming less and less, and dominated by food imports.

 Interestingly, while tourism is growing, the agricultural and meat industry, i.e. production at almost all levels, is falling.

As a reminder, in March 2022, the Amendments to the Value Added Tax Act were adopted and entered into force on April 1, 2022. This decision included the reduction of VAT on butter from 25% to 5%, fresh meat and fish from 13% to 5%, while the VAT on milk remained the same, but let's remember that in 2013 it was increased from 0% to 5%.

"Unfortunately, this decision excluded products such as fermented milk products, cheese spreads, meat products, salami and prosciutto, which are still taxed at the full 25% VAT. One of the problems we find is the fact that frozen meat and fish are also taxed at the full rate of 25%, which significantly reduces the income of our large producers who fail to sell fresh meat and fish in a certain period of the year. By neglecting these categories, the Government threatened the business of all producers of the dairy and meat industries, especially the small ones that make up an important part of the high-quality Croatian gastronomic offer which precisely produce hard cheeses, prosciutto, sausages, etc." states from the UGP and emphasize that this move created a complete imbalance in the competitiveness of domestic and imported products because Croatia is not aligned with the practices of other European countries where VAT on food ranges from 0% to 10%.

Unfortunately, this leads us to the fact that the sale of imported dairy and meat products is flourishing in Croatia, while at the same time in Poland, domestic production is protected with a VAT rate of 0% on food, they add from the UGP and emphasize that they believe that Croatia's entry into the Schengen zone represents the right time to reduce VAT on dairy and meat products, and precisely such a move by the Government would contribute to the recovery of the Croatian economy, which is still suffering from the consequences of inflation and insecurity.

"We have by far the highest VAT on food in the EU, it is high time for a uniform rate of 5% if we want to have competitive food producers, and we are asking the Government of the Republic of Croatia to do so as soon as possible. It is time for serious, not cosmetic moves, with a significant reduction in bureaucracy and regulations.” he said Hrvoje Bujas, President of UGP. 

The Association Voice of Entrepreneurs, the Association of Croatian Small Dairies, the Association of Pag Cheese Producers and the Group of Meat Industries believe that it is necessary for the Ministries of Finance and Agriculture to jointly devise fairer tax policies that will support small businesses and encourage the growth of domestic agriculture.

"We propose to reduce VAT on all food products to a level that is in line with European standards and practice, in order to ensure fair competition and encourage the growth and development of our producers." they conclude in their press release. 

Photos: Polina Tankilevich, Pexels.com

 

 

Author  HrTurizam.hr

23. May 2023.