ZAGREB, July 26 (Xinhua) -- The Croatian government presented on Friday the fourth round of the tax reform which, with the previous rounds, brings a total relief of 10 billion kuna (1.5 billion U.S. dollars).

The government decided to reduce VAT on food for hospitality facilities from 25 to 13 percent. Also, people under the age of 25 will be fully exempt from tax obligations, while those from 26 to 30 years of age will get 50 percent off.

Prime Minister Andrej Plenkovic announced that from Jan. 1, 2020, the VAT would be reduced from 25 to 24 percent.

He said that the latest measures are also demographic. "Those who enter the labor market and have the freedom of movement will gain a certain position in their early stage of business life which will enable them to get higher incomes and stay in Croatia," Plenkovic said.

Croatia joined the European Union in 2013 and is currently facing a labor shortage because many young people are leaving the country for better job opportunities in Western Europe.

Finance Minister Zdravko Maric said that the measure of income tax on young people is demographic, social and economic.

Meanwhile, excise duties on tobacco products and alcohol will increase. Taxation of non-alcoholic drinks will be made by the share of sugars added.

Measures from the fourth round of tax reform can be applied before 1 January 2020, based on subordinate legislation.