Associations urge amendment of Contributions Act, warn businesses closing down

NEWS 14.01.2020 11:38

The associations Lipa and Women in Adria and the IPRH association of professional accountants on Tuesday asked Finance Minister Zdravko Maric to amend the Contributions Act, claiming that their predictions had come true and that small businesses were closing down on a massive scale.

“Just as we warned at the time when it was announced that mandatory contributions would be introduced for directors and heads of management boards regardless of the size or financial potential of their companies, our surveys show that micro-businesses are being closed down on a massive scale. In 2019, hundreds of such businesses closed down and their owners will no longer be net contributors to the budget,” reads a joint statement by the three associations.

They also warn that this would lead to a loss of hundreds of new jobs those businesses could have created.

The associations believe that the Contributions Act, in force since 1 January 2019, is contrary to the existing goals and strategies for the development of enterprise in the EU, including Croatia, and that it has had an extremely negative effect on start-ups, new business ventures and payments into the budget.

They repeated their demands made last autumn, asking that directors-beginners with up to three years of experience, directors whose children are below school age or attend school and who opt to work less than full time, as well as directors/liquidators of businesses whose monthly income is below HRK 15,000, be exempt from the payment of full-time job contributions.

They also warned against applying new government regulations to all enterprises equally regardless of their size and financial and organisational capacity, and called for applying the ‘think small first’ principle.

Last November, the three associations presented two surveys, one of which covered 250 accounting businesses, whose clients (companies) said that their operations had been negatively affected by the Contributions Act. A total of 439 businesses said at the time that they would close down but continue operating in some other way while 442 said they would close down and not continue working.

The other survey covered 225 businesses affected by the amended law, and 54% said they would close down.