The Croatian Banking Association (HUB) on Wednesday expressed its support for the move announced by Finance Minister Slavko Linic to ensure financial discipline, but said that there were several reasons why it was technically impossible to monitor payments of contributions.
Linic said in a Croatian Television current affairs talk show on Tuesday evening that it would no longer be possible to pay net salaries without paying contributions.
There is a law in Croatia under which net salaries may not be paid without the payment of contributions, but the law is not respected and no one is reacting. As of February 1, we are introducing a system where if at the time of payment of a net salary no contributions are paid, the bank that carries out the transaction will have to pay the contributions in question, Linic said.
When asked to comment on the announcement, the HUB said that there was already an obligation for the employers to pay contributions by the 15th of the month for the previous month.
The HUB cited several reasons why it was technically not possible to monitor the payment of contributions, saying that the banks have no way of distinguishing between types of payment because under the present regulations it is not required to specify the type of payment on payment orders.
The banks do not have, nor should they have, information about people's incomes, benefits, deductions, administrative bans or facilities to be able to check the accuracy of calculations, the HUB said.
Employers are entitled to have accounts with several banks and are free to choose from which account they will pay which obligation, which in practice means that some of the employees may receive their pay through one bank and some through another, while contributions are paid through a third or a fourth bank. Also, employers are entitled to pay salaries in cash, which is expensive and impractical, but in such cases it is impossible to monitor the payment of contributions, the HUB said.
Davor Banovic, a certified auditor and court expert in finance and book-keeping, says that Linic is right and that order should be established in that area, stressing that it can be done very simply. He says that banks should include in their software a control mechanism that would prevent the employer from closing the transaction without paying the gross salary, which includes contributions.
