Proposed law on minimum global profit tax

The Ministry of Finance i.e., the Croatian Government, proposed a new law regulating guidelines related to the initiative against profit base erosion and profit shifting that is minimum global profit tax.

Aim of the Law is to ensure that the profits of multinational corporations ('MNCs”) are taxed where economic activities generating profits are generated as well as where value is created.

Minimum global effective tax rate will be 15%. It will apply to multinational groups with revenue exceeding EUR 750 million on a consolidated basis in two of the previous four years. The Law covers the parent company meeting the income condition as well as each of its affiliated entities, regardless of the legal form of such affiliated entity.

The Law stipulates that the so-called the top-up tax amount should be collected each time the effective tax rate of the MNCs in a particular country is lower than 15%.