The final proposal regarding the expected abolition of dividend taxation has been passed by Croatian Government to the Croatian Parliament for approval.
The cornerstone of the proposal calls for: as of January 1st, 2005, the dividend income, irrespective of the domicile of investor, will no longer be taxed. The exception will be dividends paid from a company’s profits that have been earned in the period between January 1st, 2001, and December 31st, 2004. They will be subject to the withholding tax rate in accordance with the provisions of the Income Tax Law prevailing at the time of profit attribution – i.e. a tax rate of 15% will be applied.
It is expected that the Parliament will urgently accept Government’s proposal and that the new Income Tax Law will come into force on January 1st, 2005.