Mazars Tax News - April 2023

News from the Republic of Croatia

Verification of the large number of taxpayers in the VAT system

​​​The Tax Authority has recently added a new feature for multiple verification of VAT taxpayers on their portal Verification of Taxpayers in the VAT system. For the mentioned verification, it is necessary to upload a file in .txt format that contains taxpayers` identifiers listed one below the other, without additional characters.

Upon verification, for VAT taxpayers who apply the VAT Cash Accounting Scheme, the system displays (along with PIN) information whether the taxpayer is a VAT taxpayer on a specific day and whether they apply the VAT Cash Accounting Scheme.

This new feature facilitates the verification of the VAT taxpayers` status and VAT taxpayers who apply the VAT Cash Accounting Scheme for larger number of taxpayers at once. We would like to remind you that, at the end of last year, the Tax Authority has issued an opinion referring to a judgment of the European Court of Justice, which implies that a taxpayer who applies the regular taxation procedure or the VAT Cash Accounting Scheme can only deduct the input tax once they have paid the invoice to the supplier who applies the VAT Cash Accounting Scheme.

Other news

Completed negotiations between the Government of the Republic of Croatia and the Government of Hong Kong Special Administrative Division of the People's Republic of China on the avoidance of double taxation with respect to income and property taxes and the prevention of tax evasion and tax avoidance

In April, delegations from the Republic of Croatia and the Hong Kong Special Administrative Division of the People's Republic of China successfully concluded negotiations on the conclusion of an Agreement for the Avoidance of Double Taxation with respect to income and property taxes, as well as the prevention of tax evasion and tax avoidance. In this regard, the signing and ratification of the Agreement are expected to take place soon, after which it will enter into force.

The entry into force of the mentioned Agreement will lead to numerous benefits and improvements, such as:

• certain tax reliefs for all types of income,
• improvement and increased mutual exchange of goods and services,
• improvement of conditions for financial investments,
• increase of economic activities of both countries.

Corporate Income Tax return for fiscal year 2022

The Tax Authority has issued Instructions, i.e., amendments and changes to the Instructions for 2017, 2018, 2019, 2020 and 2021 published so far, that are applicable in the process of filing the Corporate Income Tax return for 2022.

Among other, amendments and changes to the previous instructions are related to the statutory changes, the amount of value adjustment and write-off of receivables that is not tax-recognized expenses, as well as paid advances.