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Doing Business in Emerging Europe by Francois-Serge Lhabitant, Yahia Zoubir

By Francois-Serge Lhabitant, Yahia Zoubir

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As a rule, companies that establish operations in a free-trade zone benefit from a 50% deduction on the corporate profit tax. If their investments in infrastructure are in excess of HRK 1 million, they receive a five-year tax exemption. Major booming sectors Croatia’s principal growth sectors are construction, energy, tourism, transportation and telecommunications. Potential investors can invest in these sectors through the purchase of company shares from the state, from the privatization investment funds (PIFs), banks or other equity holders, or through direct investments in physical facilities.

Use of the term ‘Serbo-Croatian’ to describe the Croatian language should also be avoided. It could be considered as an attack on the identity of the Croatian language, and, by the same token, as an attack on the identity of the Croatian people. 1 Basic facts With a population of more than 10 million, strategically located in Central Europe, the Czech Republic, with its capital, Prague, is bordered by Germany in the west (646 km), Poland in the north (658 km), Slovakia in the east (215 km) and Austria in the south (362 km).

So far, the government has succeeded in managing the resulting political challenges, but the opposition Croatian Democratic Union (HDZ) has managed to establish itself as the second largest party 22 Doing Business in Emerging Europe behind the SPD. As one gets closer to the 2004 parliamentary election and 2005 presidential election, further threats are likely to occur. However, since no party would benefit from an early election, the government’s coalition is likely to hold. 4 Economic environment and infrastructure Macroeconomic tendencies Since independence in 1991, Croatia has faced the typical difficulties of a country in transition, along with the problems associated with regional conflicts.

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