Croatia scraps mobile telephone tax from July 1

ZAGREB, June 20 Wed Jun 20, 2012 9:11am EDT

ZAGREB, June 20 (Reuters) - The Croatian government proposed on Wednesday the scrapping of a 6 percent tax on mobile phone services that had been introduced in January.

The parliament has to approve the decision which is seen taking force on July 1.

Originally, the tax was due to be in force until June 30 2013. Croatia is scheduled to join the European Union on July 1 that year and telecom operators and the European Commission assessed that such a tax was against EU competition rules.

The centre-left government, which took office in December, earlier said it was willing to scrap the tax if mobile telephone operators devised plans to use their profits for boosting investments in local infrastructure and services.

"Now we have their plans to reinvest into local network and to carry on with adjusting prices to the (lower) levels present in the EU. Hence, the conditions are met for abolishing the tax," Finance Minister Slavko Linic told a cabinet session.

Croatia's three mobile phone operators had complained that the tax had pushed up prices, hurt earnings and hampered investments.

The biggest is T-HT , majority-owned by Deutsche Telekom. The other two are Vipnet, owned by Telekom Austria, and Sweden's Tele2. (Reporting by Igor Ilic; Editing by David Holmes)

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