Lalovac pleased with talks with US tax authorities

Finance Minister Boris Lalovac has expressed his satisfaction with the numerous meetings he held during his visit to the United States where he attended the annual meetings of the World Bank and the International Fund earlier this week. During their visit to Washington, representatives of the Finance Ministry and the Chief Public Prosecutor’s Office met senior officials of the Internal Revenue Service of the US Department of Treasury to initiate cooperation and the transfer of experience of the US authorities in countering tax fraud.

Lalovac said that technical cooperation and the transfer of knowledge had been agreed between the US and Croatian tax authorities, as well as cooperation with the Croatian prosecutorial authorities. “We are very pleased with talks with the US Internal Revenue Service and Department of Treasury. We discussed large-scale tax evasion, their experience and how they could help us. A high-level US delegation might come to Zagreb by the end of the year to give us technical support in fighting large-scale tax evasion,” Lalovac told Hina on Saturday.

He said that the Croatian anti-fraud office would be operational next year when concrete steps would be taken against tax evasion. “Tax fraud is a major problem in the US and Europe. The amount of tax fraud in the EU is 2% of GDP on average, but in some countries it is as much as 5 or 6%, which is big money. That’s why countries must address this issue together,” the minister said. He would not give his estimate of the extent of tax evasion in Croatia, saying only that if it was like the EU average it was a huge amount of money.

Lalovac said that health and social welfare projects, worth EUR 150 million, had been agreed with the World Bank, and that in talks with IMF officials cooperation concerning the methodology of the standing review was confirmed.

IMF officials will come to Croatia in November to provide technical assistance to relevant government departments in setting up the methodology for the calculation of expenditure. “Their assistance will be free of charge,” the minister said. Talks with credit rating agencies focused on the state of the budget and the economy and their representatives expressed satisfaction with what has been done to increase the transparency of public finance in Croatia, Lalovac said.

Meetings were also held with Croatian institutional investors, who expressed certain concern over the fiscal situation in France and Italy and a possible decline of industrial production in Germany and how this might affect Europe. Among the topics discussed was pre-financing of Croatia for the next fiscal year given that government bonds mature at the start of next year. “We discussed with our institutional investors, such as Deutsche Bank, JP Morgan, Intesa, Bank of America and many others, the current situation on the US and European markets and the requirements of the European and world economies for liquidity in 2015. We opened up a possibility, if need be, for pre-financing for Croatia under more favourable terms. When we come back home and see the total needs of the government, not just the central budget but of public companies as well, we will decide whether or not we will seek pre-financing,” Lalovac said.

Lalovac said that interest rates on the European market were still favourable. “Although there is concern about the European economy, we think that that will not shut down the possibilities for financing the Croatian economy.” The Croatian delegation also included officials of the Ministry of Regional Development and EU Funds, the Croatian National Bank (HNB), the Croatian Bank for Reconstruction and Development, and the Office for Prevention of Organised Crime and Corruption (USKOK).

The delegation was headed by the Deputy Prime Minister and Minister of Regional Development and EU Funds, Branko Grcic, and included HNB Governor Boris Vujcic, Chief Public Prosecutor Dinko Cvitan and USKOK Director Tamara Laptos.