In line with the modifications of the Law on VAT dating January 1st, 2015, the entrepreneurs with the revenues up to 3 million HRK were enabled to pay the VAT following the collected realization, instead of the invoiced one. There are many comments regarding this move made by the Government as positive.

But is that really so?

There are also some issues which affect the decisionmaking following such a change:

• There is more work for the book-keepers, which is likely to increase the cost of the service,
• The company cannot make a pre-tax deduction before it has paid the invoice,
• Possible further delays in payment by the debtor, since the company is not obliged to pay the VAT until it collects the invoice.

Anyway, in order to make a proper decision regarding this issue, one is to perform an internal business analysis, as well as the cashflow analysis, setting aside the demagogic messages and remarks from either side.