The National Assembly of the Republic of Serbia adopted a set of amendments to the tax laws and laws on excises, which were published in the Official Gazette of RS no. 153/2020 of December 21, 2020.
I LAW ON CITIZENS’ INCOME TAX
Increase of untaxable amount
The first significant novelty introduced by the Law amending the Law on Citizens’ Income Tax refers to the increase of untaxable amount. Namely, the tax base for salaries is comprised of salary under this law, reduced by the amount of RSD 18,300.00 instead of previous untaxable amount of RSD 16,300.00.
The first adjustment of untaxable amount of salary of RSD 18,300 by annual consumer price index will be enforced starting from 2022.
Extension of deadline for tax refund
Deadline was extended for employers (legal entity, entrepreneur, flat-rate entrepreneur or farming entrepreneur who employs a new person) to exercise their right to refund of part of salary tax paid for newly-employed persons, namely for salaries paid until December 31, 2021, inclusive, instead of 2020 as the law previously prescribed.
The same applies to employers – legal entities that, in terms of the accounting law, fall into categories of micro and small legal entities, as well as to entrepreneurs, flat-rate entrepreneurs and farming entrepreneurs who start employment with minimum two new persons. Namely, such entities will be entitled to refund of 75% of taxes paid for salaries of newly-employed persons paid until December 31, 2021, inclusive.
Electronic notice on payment of personal salary
Other significant novelties refer to entrepreneurs and farming entrepreneurs paying personal salary. They shall be obliged to submit the notice through Tax Administration Portal on their decision to pay personal salary or to stop paying personal salary.
For persons registered in the APR, the notice on decision to pay personal salary shall be supplied through Tax Administration Portal within five days after the day of registration.
Alignment with other laws
For the purpose of aligning with the laws regulating open investment funds i.e. alternative investment funds, the part of the law regulating income from capital stipulates that such income shall also be deemed to include the income from ownership of an investment unit of an alternative investment fund, except for the fee for transfer of such investment unit.
For the purpose of aligning with the Law on Digital Assets, purchase price for transfer of such digital assets has been defined, as well as possible 50% tax relief for capital income for the payer receiving the funds by sale of digital assets.
Please be reminded that digital i.e. virtual assets mean digital recording of value that can be digitally purchased, sold, exchanged and transferred and that can be used as a means of exchange or for the purpose of investment; digital assets do not include digital recordings of currencies that are legal means of payment and other financial assets regulated by other laws, unless otherwise stipulated by law.
II LAW ON VALUE ADDED TAX
Reasons for adoption of amendments to the law
For the purpose of alignment with the laws regulating open investment funds i.e. alternative investment funds, it is stipulated that open i.e. alternative investment funds without legal person capacity shall be considered taxpayers for the purpose of trade taxation by value added tax.
Second-hand goods, works of art, collector goods and antiques
Key novelties refer to the issuance of e-receipts and the decisions referring to special procedure for taxation of second-hand goods, works of art, collector goods and antiques in terms of enabling VAT payers trading such goods (trade in second-hand goods, works of art, collector goods and antiques) to opt during each transaction whether they would apply general or specific taxation.
Trade in goods and services in construction industry
For the purpose of simplifying the rules referring to definition of tax debtor for trade in goods and services in construction industry, which VAT payer has towards other VAT payer i.e. Republic, republic authorities, territorial autonomy authorities, local self-government and legal entities established by law i.e. act of republic authorities, territorial autonomy authorities, local self-government for the purpose of performing public administration or local self-government activities, it is stipulated that trade in goods and services in construction industry for the purpose of establishing tax debtor shall be considered trade in the amount exceeding RSD 500,000, excluding VAT.
Possibility to correct falsely calculated VAT
Possibility to correct falsely calculated VAT in excessive amount has been specified and it is stipulated that a taxpayer who expressed an excessive amount of VAT in statements shall be entitled to correct such amount in the following situations:
- If he issued a new receipt with corrected VAT amount,
- If he issued a receipt without VAT,
- If he reversed the receipt when the receipt should not have been issued.
In all these situations, it is necessary to have a document of receipt receiver – VAT payer or a person entitled to VAT refund – indicating that the falsely expressed VAT was not used as previous tax and that such VAT amount was not subject to request for VAT refund (when the receipt was issued to VAT payer or person entitled to VAT refund).
III LAW ON CORPORATE PROFIT TAX
Alignment with other laws
The Law amending the Law on Corporate Profit Tax stipulates that capital profit shall be realised by sale or other transfer of investment fund unit with compensation, as well as of digital assets, unless the taxpayer has a licence for provision of services relating to digital assets under the law regulating digital assets, and which provided such digital assets exclusively for further sale within the scope of activities related to digital assets under that law.
Precise establishment of purchase price for real estate and digital assets
It is stipulated that purchase price for real estate acquired before January 1, 2004 shall be deemed as net book value established on December 31, 2003 in accordance with accounting regulations that applied to financial statements for 2003.
Novelty is that the establishment of purchase price for digital assets and purchase price of digital assets acquired by so-called “digital assets mining” has now been prescribed.
The provisions of this law apply to the establishment, calculation and payment of tax base for the tax period starting in 2021.
IV LAW ON EXCISE
The main reason for adoption of the Law amending the Law on Excise is the need for further harmonisation of excise policy with the European Union standards, so that the minimum level of EU excise taxation would be achieved in the proposed time period (90 EUR for 1000 cigarettes). It remains to be seen whether the new solutions will be effective.
The law stipulates a plan for gradual increase of excise for cigarettes in the period 2021-2025, through increase of specific component of excise every six months by RSD 1.50/pack, whereas ad valorem rate – proportionate component of excise would remain unchanged (33%) regardless of the period of application.
Also, the base for calculating the excise for e-cigarette liquid has remained the same, whereas the amount of excise would be increased by RSD 1.00/ml each year in the next mid-term period (2021-2025).
The calendar of excise for non-combusted tobacco has also been established for the period 2021-2025; by 2025, from current 40% it should reach 100% of minimum excise for 1,000 pieces of cigarettes as established for the category of average weighed retail price for cigarettes. The excise currently applied is still one of the lowest in Europe and the world, hence the increase of this excise is aimed at reaching the EU average, which means that this excise should be 30% of excise for cigarettes.
Novelties in the Law on Excise also include the cases where refund of the paid excise can be achieved (when a person exports excise product purchased in the country).
It is noteworthy that the first subsequent harmonisation of dinar amounts of excise for cigarettes and e-cigarette liquids will be enforced starting from January 2022.
The beginning of law application
The provisions of all of the abovementioned laws will start to apply from January 1, 2021, except for the provisions in the part relating to digital assets, which will start to apply from the day of entry into force of the law regulating digital assets i.e. from December 29, 2020 (whereas the Law on Digital Assets shall start to apply upon the expiry of six months after its entry into force).
This article is to be considered as exclusively informative, with no intention to provide legal advice.
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By Ivana Ruzicic, Partner, and Natalija Dukic, Associate, PR Legal