Excise Tax Gives Rakija Producers Headache

Rakija, the popular potent spirit produced from fermented fruit and found in most Croatian households, may inflict headaches on novice users, but its Rakija makers who have the headache now after Croatian government announced new laws effecting its production.

The recently introduced Excise Tax Act now means households can produce the popular spirit for ‘personal consumption’ and any amount produced over the prescribed amount will attract excise duty. Regardless if a household has 10 members or just 1, 20 litres of pure alcohol per year is the maximum quota, if ‘households’ go over that amount then they must  report and register in the register of excise duty payers, at least eight days before the start of production. Producers must also calculate and pay the excise tax no later than 20 January the following year. Those producers who produce rakija for their extended family and friends, which has been a tradition in Croatia, and go over the prescribed 20 litres are not happy about the new law.

“Fiscalisation is one thing, catching those tax avoiders in say cafes, bars and on the markets is ok, but this is over the top,” one rakija producer told Croatia Week.

50 litres per year per household of rakija with up to 40% alcohol content can be produced before excise tax kicks in. Fines ranging from 5,000 to 100,000 kuna await those who ignore the law.