Sat, Sep
59 New Articles

Serbia Proposes a Set of Economic Measures in Response to the COVID-19 Outbreak

Serbia Proposes a Set of Economic Measures in Response to the COVID-19 Outbreak

  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

The Government announced on 1 April 2020 its proposal of a Program of economic measures to reduce the negative effects caused by the COVID-19 pandemic and an attempt to support the economy of Serbia, split into four categories.

Tax policy measures

  • Payroll tax and social security contributions payments for the private sector during the state of emergency are postponed, with a subsequent repayment of the taxes in installments beginning at the earliest from 2021 (with a possibility of further deferral in the following 24 months, under conditions which will be subsequently prescribed);
  • Payments of advances on corporate income tax in second-quarter earnings of this year are postponed;
  • Donation contributors are exempt from the VAT payment obligation.

Direct help to the private sector

  • Direct assistance to flat-rate entrepreneurs and to those who pay real income tax, micro, small and medium-sized enterprises in the private sector, in the form of payment of minimum wage for 900 thousand employees during the state emergency;
  • Direct assistance to large private sector companies with payment of 50% of the net minimum wage for employees whose work has been terminated by a resolution in accordance with the Labor Act.

Measures aimed at the preservation of liquidity

  • Development Fund for Development of Entrepreneurship, micro, small and medium-sized enterprises, agricultural holdings and cooperatives’ program of financial support through subsidized working capital loans valued at 200 million euros;

The repayment term is set at 36 months including a 12-month grace period, with a prescribed maximum amount for each category of commercial entities:

  • Entrepreneurs and micro businesses – up to 5 million dinars,
  • Small businesses – up to 25 million dinars, and
  • Medium businesses – up to 50 million dinars.

Received funds may not be used for organizing betting, lottery and similar activities, as well as trade activities, oil production, or any other activity prescribed as forbidden under the relevant Serbian laws.

  • Guarantee scheme to support the economy in the conditions of the COVID-19 crisis for credits to maintain liquidity and working capital for entrepreneurs, micro, small and medium enterprises, agricultural holdings through commercial banks.

Other measures

  • Moratorium on dividend payment until the end of the year, except for public enterprises;
  • Stimulus to increase domestic demand in the amount of EUR 100 per each citizen of legal age.

It is important to note that the measure applies to all commercial entities, except those that reduced the number of employees for more than 10% (excluding the employees whose employment agreement expires during the state of emergency) and those that temporarily ceased business prior to the proclamation of the state of emergency (i.e. prior to 15 March 2020).

The measures are expected to have a total effect of RSD 608.3 billion (approx. EUR 5.1 billion). Further clarifications and conditions under this program are expected and we will provide all updates as soon as the proposed measures are adopted.

By Milica Savic, Partner, and Branimir Rajsic, Senior Consultant, Karanovic & Partners

Karanovic & Partners at a Glance

Who we are

Karanovic & Partners is a regional legal practice in Southeast Europe with tradition spanning two decades and cooperating offices in Serbia, Croatia, Slovenia, Montenegro, Macedonia and Bosnia & Herzegovina. With more than 100 attorneys at law cooperating across the region, we take pride in our work, dedication and understanding of our clients' industries and needs.

What we do

We work with some of the most respected and reputable businesses in the world, banks, as well as governments, state-owned entities, startups and NGOs. We see our clients as long-term partners.

We focus on straightforward solutions and tailor-made advice. Lawyers cooperating with us are fully immersed in our clients’ culture and industry to ensure that the work is delivered intelligently and reliably.

What sets us apart?

In our company culture, excellence is a must. We are reliable, adaptive and fast.

Karanovic & Partners operates under the “one team” principle, combining our regional reach and local know-how to deliver coordinated legal advice necessary for achieving our clients’ goals.​

All News about, and Legal Analysis by, Karanovic & Partners can be found here.

Firm's website: https://www.karanovicpartners.com/