Deputy Prime Minister and Minister of Finance Marko Primorac announced that pensions will no longer be taxed as of January 1, 2027. "Given that I believe that we have a common effort at all levels of government that pensions need to be increased, we believe that it is opportune, logical and rational to abolish the tax on pension income and for them to not be taxable as of 2027," he said. He also told reporters that, in line with the increase in excise duties on tobacco products, cigarettes will become more expensive by up to 20 cents per "pack."
Cigarette prices will increase by up to 20 cents per "pack".
The Government today adopted a Regulation that will bring higher excise duties on tobacco products into effect from January 1, 2026, and according to Primorac, the implementation of the new Regulation should increase state budget revenues in 2026 by around 130 million euros.
In addition to fiscal effects, Primorac said after the Government session, increasing excise taxes aims to achieve the desired social effects, primarily in terms of the health of citizens.
Care was taken to ensure a "balanced" increase in excise duties
He also noted that this is a regular increase in excise duties, which is the practice of other EU member states, and that Croatia is still one of the EU members that is quite rational in terms of the excise tax burden on tobacco products.
Thus, the minister said, care was taken to ensure a "balanced" increase in excise duties and reminded that in the period five or more years ago, when the means of payment was still kuna, there was a price increase of around two kuna per "pack" of cigarettes.
According to the regulation presented at today's session, the specific excise duty for 1.000 cigarettes will be 59,10 euros, the proportional excise duty 34 percent of the retail price and the minimum excise duty on cigarettes in the amount of 130,60 euros for 1.000 cigarettes. The excise duty is also increased for fine-cut tobacco for rolling cigarettes and amounts to 126,90 euros per kilogram, for other smoking tobacco 126,90 euros per kilogram, for cigars 126,90 euros per 1.000 pieces and for "cigarillos" 126,90 euros per 1.000 pieces. The excise duty for e-liquid is 0,25 euros per milliliter, for heated tobacco products 211,30 euros per kilogram and for new tobacco products 126,90 euros per kilogram.
The government also adopted a Regulation on Amendments to the Personal Assistance Act at the session, and Minister Primorac said that all necessary funds would be secured and disbursed. He also presented an initial projection according to which the total cost of the adopted Regulation on Personal Assistance could reach around 125 million euros.
It is logical and rational to abolish the tax on pension income.
He also announced that from January 1, 2027, pensions will no longer be taxed.
As he explained, the central government, through regular indexations, increases pensions, so some of them fall into the "tax scissors" and pensioners have to pay income tax, which is ultimately the income of local government units.
"Given that I believe that we have a common effort at all levels of government that pensions need to be increased, we believe that it is opportune, logical and rational to abolish the income tax on pensions and make them non-taxable from 2027," said Primorac.
The goal of introducing fiscalization 2.0 is not repression, but a historic step forward for society and the economy into the modern digital age.
He also said that, from the perspective of the Ministry of Finance and the Tax Administration, the system is fully ready for the introduction of fiscalization 2.0, reiterating that this is the biggest "digitalization breakthrough in the history of Croatia."
"When you ask me if the system is technically ready, it absolutely is, we are convinced of that. But I cannot claim that there will be absolutely no difficulties, and if there are any, we will eliminate them and there is no reason for concern," Primorac pointed out.
He noted that it may happen that an individual information intermediary, given its capacities and possible difficulties in its infrastructure, will no longer be able to provide services at some point. However, this should not in any way endanger the taxpayer himself, who can simply choose another information intermediary, the minister explained.
Responding to a journalist's question, he said that around 50 meetings were held at various levels at the Ministry of Finance on the topic of fiscalization, but that none of them discussed penalties and supervision.
"The goal of introducing fiscalization 2.0 is not repression and harassment of taxpayers, but a historic step forward for society and the economy into the modern digital age," Primorac said.
Source: Hina/Government
Photo: Vlada.hr
