In the procedure of harmonising the Croatian valued added tax system, which has in fact been harmonised with the Sixth Directive to a great extent, certain approaches that deviate from the provisions of this Directive were noticed. One of the areas of disharmony relates to the restricted application of the institute of VAT refund to foreign enterprises.
In the Croatian VAT Law, the institute of the refund of input VAT is restricted and relates to foreign enterprises only inasmuch as they participate in trade exhibitions in Croatia. Other foreign enterprises, includes transport operators, cannot claim a VAT refund.
Since the harmonisation of the Croatian VAT taxation system will require the ability for foreign transport operators to claim tax refund, the financial impact of this extension on the central government budget needed to be evaluated, as well as the technical changes that relate to the work and operational organisation of the tax administration.
The primary objective of this research was an assessment of the possible amounts of tax refund and the number of foreign carriers meeting the conditions for tax refunds according to the Eighth and Thirteenth Directives. The analysis covered foreign bus passenger carriers. The secondary objective of the research was to assess the economic effects of the tax refunds on VAT revenue and the organisation of the Tax Administration’s work.