stjepan gadžo and irena klemenčić: effective international information exchange as a key element of modern tax systems: promises and pitfalls of the oecd's common reporting standard public sector economics 41 (2) 207-226 (2017) (e.g. FATCA) and to the problem of protecting taxpayers' rights and information. Nowadays the so-called automatic exchange of information (AEOI) between tax authorities has emerged as a new global standard. This is mostly due to the development of specific national and international models, aimed at enhancing intergovernmental cooperation in fighting offshore tax evasion. In this regard special attention should be drawn to the 2014 release of the OECD's Common Reporting Standard (CRS), which is based on the idea that banks and other financial institutions should play a crucial role in providing information

stjepan gadžo, irena klemenčić: time to stop avoiding the tax avoidance issue in croatia? a proposal based on recent developments in the european union financial theory and practice 38 (3) 277-302 (2014) 278 Abstract The paper takes a tax policy perspective in analysing the approach to tax avoidance in Croatia and expounding its existing shortcomings. It is argued that Croatia is yet to develop a coherent legislative framework suitable for curbing tax avoidance in an equitable, efficient and simple way. One instrument that has hitherto been ignored is the general anti-avoidance rule (GAAR), a keystone of anti-avoidance policies in other countries. The authors propose the introduction of a specific GAAR, based on recent developments in the European Union (EU), in Croatian tax legislation. This proposal is supported by multiple tax policy arguments. Special emphasis is placed on the requirements of legal certainty, a traditional weak spot of the Croatian tax system. The proposal is put in the context of the persistent quest for a sustainable public finance system in times of crisis.1 As cited in Perrou (2006). stjepan gadžo, irena klemenčić: time to stop avoiding the tax avoidance issue in croatia? a proposal based on recent developments in the european union financial theory and practice 38 (3) 277-302 (2014) 279 stjepan gadžo, irena klemenčić: time to stop avoiding the tax avoidance issue in croatia? a proposal based on recent developments in the european union financial theory and practice 38 (3) 277-302 (2014) stjepan gadžo, irena klemenčić: time to stop avoiding the tax avoidance issue in croatia? a proposal based on recent developments in the european union financial theory and practice 38 (3) 277-302 (2014) 298 references

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Economic development in the past decades and the increase of cross-border business by the multinationals coupled with recent financial crisis have brought many questions about whether the taxpayers are paying their fair share. In order to assess the equitable amount of taxes due, revenue authorities often rely on information provided to them by taxpayers. In conducting their procedures, revenue authorities are in principle bound by tax secrecy. However, recently, the tax systems have introduced tax policy instruments with opposing effects, intended to provide full insight in taxpayers’ revenues worldwide and affect the taxpayers’ behaviour towards greater tax compliance. Two such instruments are particularly worth noting, public shaming lists, used primarily nationally, and international exchange of information, as a cross-border procedure. Through comparative legal approach we provide an analysis of legal instruments balancing tax confidentiality and tax transparency. As the research will show, the optimal level of tax secrecy, while preserving international standards of tax transparency, is very difficult, if not impossible, to accomplish. Legal tradition of secrecy, implementation of international standards and the evaluation on the adequacy of such measures should all be taken into account before jumping to any conclusions about the perfect balance. The goal of accomplishing fair and equitable tax system must not be disregarded as well.

This chapter describes the basic features of financial law and financial regulation in the Republic of Croatia. With the aim of defining financial law in Croatia, the authors provide the setting thereof in the Croatian legal system and address the main areas which it encompasses. The introductory part describes the development of Croatian financial law and sets the boundaries by identifying the areas it includes. Beginning in the early 1990s, marked by the transition to market economy, the introduction of new tax forms as well as the development of tax procedure and tax administration are explained. Simultaneously, budgetary law, social contributions law, law on financing local and regional units, fees law and customs law were created to eventually assume their present form. Starting from the constitutional provisions, this chapter sets all those areas in the framework of financial law regulation and provides basic information for each of them. The descriptions include the concepts and instruments of financial law in Croatia, starting with the budget law of the state and of local self-government, followed by tax and fee law, customs law, and social insurance law. The overview is supplemented by the most important aspects of tax procedure and tax administration. The conclusion reflects on the present state of Croatian financial law, the challenges that influenced its development, and the prospects for the future.