Taxation and Development in Croatia

Although Croatia does not provide incentives for investment in developing countries, it does employ some measures to attract investment into its own jurisdiction. These include tax and customs relief for companies making investments for a specified period to provide jobs and to make other contributions to the Croatian economy. It is expected that with accession to the European Union (EU) the practice of providing investment incentives will diminish. Croatia taxes its residents on worldwide income and provides a foreign tax credit to avoid double taxation. Although there are no explicit incentives for investment in developing countries, the tax exemption for dividends paid to a Croatian corporation may have the effect of encouraging such investment if other favorable conditions are present.