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06 April 2020
On 20 March 2020 Parliament almost unanimously passed amendments to 19 laws enabling the government to implement rules and regulations for 63 different measures which aim to help and protect domestic businesses, companies and citizens whose business activities have been affected by the COVID-19 pandemic.
The measures were passed urgently so that they could be implemented immediately from midnight 23 March 2020. The measures will remain in place for three months with the possibility of an extension and can be amended and upgraded depending on changing needs, latest developments and arising consequences during the application period. This packet of measures is the first step taken by the government to protect the national economy in response to the coronavirus pandemic. It is estimated that over 70% of businesses are already directly or indirectly affected by the COVID-19 outbreak. There is almost no national industry not affected by the pandemic – or to use an appropriate pun, immune to it – differing only in the extent of impact, from full to partial cessation of business activities.
The measures were presented at a press conference on 24 March 2020 by the prime minister and the ministers of labour, finance and the economy. The prime minister emphasised that the measures were horizontal, intended for micro, small and medium-sized enterprises (MSMEs) and legal entities, with the aim of preserving employment and improve sustainability of businesses in tax-payment difficulties and businesses in financial difficulties. The measures' main objectives are:
The measures have three main targets and therefore include employment, fiscal and finance-related packages.
The minister of labour summarised that the employment package refers to all employers that cannot keep their employees and pay out their salaries. Such employers are entitled to a subsidy in the amount of the national minimum salary for three months. For 2020 this amounts to approximately €500 per month. Subsidies are to be directly remitted to employers for payment to employees.
The minister of finance presented the fiscal package in the form of various tax-payment benefits for taxpayers in difficulty. The basic principle for the benefits is removing interests and the postponement of payments of various matured and unmatured taxes, duties and imposts to the ministry of finance while the measures are effective.
The minister of the economy presented two separate finance-related packages: the first concerns the postponement of instalment payments for matured and unmatured duties, while the second includes the financing of business activities under favourable terms for businesses in difficulty during the COVID-19 pandemic. The financing will be performed through state financial institutions (ie, the Croatian Bank for Reconstruction and Development, HBOR, and the Croatian Agency for MSMEs, HAMAD BICRO) and commercial banks. Commercial banks as major creditors and financers will play a crucial role in the enforcement of finance-related packages.
All foreclosures and forced executions of outstanding debts of companies and citizens to banks and other creditors have been postponed, as well as payment of various imposts, rents, leases and numerous other duties relating to family, professional and personal businesses or properties used for business purposes.
The different eligibility requirements and mechanisms for each of the 63 measures are mostly defined and applicants should provide the appropriate documents as evidence in a simplified summary procedure electronically. Various means of e-communication with the state administration are available (eg, emails and the e-citizen app).
When they were presented to the public, the government admitted that the measures were not perfect and that a number of points should be amended, some more quickly than others. Further, technical and practical difficulties in implementation, especially at the beginning, are to be expected. Nonetheless, starting the process of protecting, helping and supporting the national economy as well as citizens, could not be postponed any longer and the measures were urgently required.
According to the prime minister, the European Union has made €240 million available to Croatia as immediate support. At present, there are no precise estimates on how much the measures might cost.
The Croatian Employers' Association and other organisations in the private business sector have raised significant objections to the measures, including that:
It is also expected that Croatia, which presides over the EU Council as of 1 January 2020, will make the utmost attempt to ensure that EU institutions and member states, which are beginning to pass and apply similar measures, will coordinate and provide harmonised and uniform measures for the EU economy with the purpose of protecting and helping businesses to the benefit of EU member states and the entire European Union.
For further information on this topic please contact Anita Krizmanić at Maćešić & Partners by telephone (+385 51 215 010) or email (email@example.com). The Maćešić & Partners website can be accessed at www.macesic.hr.
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