Yet another set of Amendments to Tax Laws

Corporate Income Tax
Tax credit abolished

The amendments abolish tax credit for investments into fixed and intangible assets. Tax credits earned until 31 December 2013 remain in force.

Personal Income Tax
Tax base of Serbian residents assigned to work abroad clarified

In case of natural persons – residents of Serbia assigned to work abroad, salary tax is imposed only on the salary for preformed work and not on compensation of costs.

Salary of entrepreneur

Previous set of amendments adopted in May 2013 allowed entrepreneurs to declare which portion of their total income should be treated as salary. The latest amendments specify that this election can be made until 15 December for the following financial year, with the exception of the election for 2014 which can be made until 31 January 2014.

Games of Chance

A deduction on the basis of expense paid to participate in a game of chance is no longer recognized for classic games, such as lottery and sports betting.

Calculation and payment of withholding tax banks

The amendments specify that banks can calculate and pay withholding tax on interest assigned to individual clients on the first business day following the accrual of interest, if accrual date is on a public holiday or weekend.

Mandatory Social Contributions
Social contributions payable by shareholders

Individuals who are shareholders and managers in limited liability companies have been obliged to pay mandatory social contributions even if they are not employed with the company, in which case the contributions have been payable on the statutory minimum monthly base. The amendments now allow this category of social contributions obliges to declare as their base an amount higher than the statutory minimum. Social contributions have to be paid until 15th of each month for the previous month.

Social contributions base for employees working for two or more employers

If an employee works part time for more than one employer, each employer is obliged to calculate and pay social contributions on the salary paid to the employee, if the salary is equal or higher than the proportional amount of the minimum monthly base for contributions. Prior to the amendments, salaries from all part time jobs were added together for the purpose of determining whether the total salary exceeds minimum monthly base for contributions.

Deadlines for payment of social contributions by entrepreneurs

Entrepreneur who has opted for payment of personal salary but has not distributed salary by the end of a month is nevertheless obliged to calculate and pay social contributions on the statutory minimum base no later than on the last day of a month for a previous month.
Entrepreneurs who treat entire income as business income are subject to the self-taxation regime (Serbian: samooporezivanje). This means they pay monthly advances on the account of social contributions and determine final amount due at the end of the year by 15 March of the current year for the previous year.

Payment of social contributions by entrepreneurs while on leave

Salary compensation received by entrepreneurs while on maternity leave, childcare leave or special childcare leave is not subject to mandatory social contributions.

Value Added Tax
Tax rate

Reduced tax rate of 8% has been increased to 10%
Supply of personal computers and their components is no longer subject to reduced tax rate, but to standard rate of 20%.
The application of these new provisions starts as of 1 January 2014

Supply of tobacco and processed tobacco

The amendments aim at preventing illegal supply of tobacco products:
Registered tobacco manufacturer mays sell tobacco only to registered processors registered exporters of tobacco, processed tobacco or tobacco products.
Registered individual tobacco manufacturer may sell tobacco only to registered manufacturer or processor with whom he/she has a cooperation agreement.
Registered tobacco processor is obliged to sell processed tobacco only to the registered manufacturer of tobacco products or to registered exporter of tobacco, processed tobacco or tobacco products.
Exporter of tobacco, processed tobacco or tobacco products who acquired these goods for the purpose of export cannot use the goods other than for exports.

All of the aforementioned obligations are at the pain of fine in the amount of up to RSD 2.000.000 (approx. EUR 20,000).

Moreover, tobacco and processed tobacco traded other than as prescribed above is subject to excise tax as if it were smoking tobacco or cut tobacco.
Tax Procedure and Administration
Property tax

Amendments provide, in relation to property tax, for an exemption to the general rule according to which tax obligation is determined in accordance with the regulations applicable at the time when the obligation occurred. Namely, property tax shall be determined according to the regulations that are in force t on 1 January of the year in relation to which property tax is being assessed.

Payment of salaries, compensation of salaries and other personal income

Amendments provide that banks are not allowed to transfer any payment that qualifies as personal income subject to withholding tax (other than interest) unless the payment order contains a reference number assigned by the tax authority in relation to withholding tax on the respective income.

Tax returns – withholding tax

Previous amendments to the Law on Tax Procedure and Administration (Official Gazette RS no. 47/2013), which came into force at the end of May 2013, provided that as of 1 January 2014, legal entities paying personal income to individuals will have to submit electronic tax returns for withholding tax. In this respect, the current amendments provide for a transitory solution according to which all legal entities that will have paid personal income to individuals in 2013 can submit “old” hard-copy individual tax returns until 31 January 2014 and “old” hard-copy aggregated tax returns until 5 March 2014.

The Serbian is available for download in the pdf format.

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