The Association of Entrepreneurs (UGP) warned on Saturday that the excessively high tax rate on coffee encourages cross-border purchases, discourages personal consumption and negatively affects GDP, and called on the Government of the Republic of Croatia to reduce this tax.
In the press release from UGP, they pointed out that in Croatia the special tax on coffee amounts to 6 to 20 Kuna per kilogram, that is, with VAT, coffee is taxed approximately 35 percent per cup.
"Due to the high tax burden, consumers in Croatia cannot afford to consume coffee, and this deprivation is not only unfavourable for consumers, but also on the state budget," the UGP president said in a press release.
According to the UGP, according to a 2017 Ipsos survey, more than 93 percent of Croatian citizens drink coffee, so it cannot be considered a luxury item. Adding that coffee, that is, caffeine, has proven positive effects on the human body, they ask why there is a special tax on it.
They point out that in 2021, about 118 million Kuna was "harvested" from the special tax on coffee in Croatia, which is 0.7 percent of the total revenue from excise duties and special taxes in the Republic of Croatia.
"Such insufficient tax treatment leads to the encouragement of cross-border purchases, discourages personal consumption and thus negatively affects the GDP", warns the UGP.
Therefore, they propose to the Government of the Republic of Croatia to abolish the special tax on coffee so that entrepreneurs can use this relief to create new jobs and invest in market development, which, they believe, will ultimately increase overall competitiveness in relation to neighbouring countries, and thus GDP growth.