Croatia Moves to Extend Mobile Phone Tax

Croatia's three mobile phone operators, all majority owned by foreign companies, have said they are shocked and disappointed with the government's decision to extend a six per cent fee on services in mobile telephony until Croatia's entry into the EU, set for July 1, 2013.

Croatian Telecom, Vipnet and Tele2 Croatia issued separate statements in which they warned that the reintroduction of the fee, which was instated by the previous, centre-right government but was set to expire on January 1, 2012, would have dire consequences.

According to the firms, the tax will affect the investment potential of the telecommunications sector with indirect repercussions on the country's GDP.

They said that the connections between economic development, society and modern telecommunications were the reason why the European Commission opted against additional taxes on the telecom sector.

The government, meanwhile, sees the move as necessary to contribute to improving the country's troubled financial situation and significant budget gap.

First Deputy Prime Minister Radimir Cacic said that the revenues from the tax would generate HRK 300 million ($50.5 million) annually

Cacic said that mobile telephony companies operating in Croatia posted profits between HRK 13 and 15 billion, but they decided not to apply the European Commission's order on equalising roaming charges and charges for roaming in Croatia were three to four times higher.

The government's proposal will have to be approved by parliament when it convenes next week.

The six-percent fee had been imposed by the government of Croatian Democratic Union, HDZ, in August 2009 as one of several anti-recession measures. The HDZ later decided to annul that measure as of 1 January 2012.