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Denis Cupic, Head of Asset Management, Westgate Shopping City. Credit: Davor Puklavec/PIXSELL

Employers’ association calls for taxation of cross-border e-commerce

The Croatian Employers Association (HUP) has sent a proposal to the Finance Ministry to start taxing, in line with the relevant EU directive, cross-border online commerce and use the tax revenue to help the Croatian commercial sector, where, it says, more than 300,000 jobs are at risk directly or indirectly.

HUP claims that the growth on e-commerce during the current coronavirus pandemic has put domestic retailers in an unequal position in relation to foreign online retailers because a vast majority of them use a Croatian internet domain and create a false impression among Croatian buyers that they are buying in a Croatian store.

The bills do not show the amount of VAT, which means that VAT is actually paid in some other country, HUP says, calling for strict control and collection of taxes on cross-border shipments.

“Fair and transparent taxation of online trade is, just as the taxation of ‘classic’ trade, an opportunity for the state to earn more than a billion kuna from e-commerce tax alone.

The biggest internet stores are registered in tax havens like Romania, the Czech Republic or Cyprus and it is solely due to omissions by our tax authority that they do not pay VAT in Croatia, which has one of the highest VAT rates in Europe,” said Denis Cupic of HUP.

He proposed that revenue from e-commerce taxation be used to set up a fund to help in the recovery of the domestic retail sector, which, he says, is on the brink of bankruptcy due to restrictions imposed due to the coronavirus epidemic.

Cupic also calls for investigating cases of abuse in the customs-free shipment of parcels of small value to Croatia, noting that that way global e-giants place goods of higher value on the Croatian market, avoiding local taxes which are paid by everyone else in the national retail sector.