At its session on Monday, the government sent a bill of amendments to the Value Added Tax Act into parliamentary procedure which, amongst else, prescribes the abolishment of the zero rate of VAT on bread, milk, books, medicines, orthopaedic aides and cinema tickets.
As of 1 January 2013, VAT on those products will be 5%, in line with EU directives, Finance Minister Slavko Linic said.
The bill also recommends a lower VAT on recreational sea vessels which will now succumb to customs-free trade. The government explained its decision by desiring to retain vessels in Croatia once it joins the EU.
Prime Minister Zoran Milanovic recalled recent reductions on excise taxes for luxury items, explaining that this was done so that money for luxury items was spent in Croatia and not elsewhere.
Figures indicate that amendments to the VAT Act could bring in an additional 1.3 billion kuna to the budget.
