If, for example, in one year they earned an average of 700 euros gross per month, they would be obliged to pay about 270,000 dinars per year for taxes and contributions.
The Tax Administration has already done what it announced and has shown that there are no more jokes with it. Solutions for unpaid taxes and contributions on salaries began to arrive at the addresses of citizens who work for employers abroad from Serbia.
The freelancer who worked through Upwork, the world’s leading online platform, decided to pay 20 percent tax, 25.5 percent for PIO and 10.3 percent for health care, all of which are prescribed fees for payments from abroad, which are calculated as income for the previous four years. His tax solution was announced by the Association of Online Workers and Startit.
The tax control of this freelancer, who earns money by creating video games for mobile phones, began in June this year. Then, ex officio, the procedure of determining the tax on realized income was initiated on the basis of payments of money from abroad to foreign currency accounts. According to the document, “interest is calculated from the date of arrival of the tax liability until September 21, 2020.” Thus, in addition to the calculated tax, he will have to pay interest for a four-year period.
Milan Pogacar from the Association of Online Workers says for Politika that they have received four or five tax debts. They demand that the collection of taxes and contributions to individuals who received foreign currency remittances from abroad be stopped, explaining that they are all people who earned income from abroad, whether they worked for a foreign employer, or that it was a sale over the Internet.
According to the data of the National Bank of Serbia, there are 750,000 of them, that is, so many of them received foreign currency remittances from abroad until June. Although it is estimated that there are more than 100,000 of them.
– We demand any suspension of collection and initiation of procedures until the end of negotiations with the Ministry of Finance and the Tax Administration. We ask that such solutions not be implemented for several reasons. Because, for example, not only interest but also contributions are calculated, although they should not be. Because in 2019, the Law on Compulsory Social Insurance of Individuals was passed, where freelancers were recognized for the first time that they could pay taxes and contributions at all. The tax can be legally calculated backwards for five years, but the law cannot be applied retroactively – says Pogacar.
He agrees with the assessment of the Center for Public Policy Research, that the average income of freelancers is around 700 euros per month for men and 500 euros for women. According to their assessment, even if the smallest tax debt is in question, according to the most favorable non-taxable base of 50 percent, the Serbian freelancer owes a serious amount. If, for example, they earned an average of 700 euros per month in one year, they would be obliged to pay taxes and contributions in the best case, around 2,300 euros.
However, some freelancers earn much more than this average. It is enough to visit the site, which deals with the analysis of earnings on social networks, and make sure that some Serbian YouTubers earn 15,000 dollars and more a year through this platform. The most popular ones with more than a million followers earn as much as 618,000 to 860,000 dollars a year. These are the maximum amounts earned by Serbian YouTubers. Most earn far less and they themselves explain this in the videos they publish.
Asked how he explains this, Pogacar answered that he believes that a good part of YouTubers are in legal business flows.
– If any of them had higher incomes, he entered the legal business either as a lump sum or founded d. o. o. If they did not do that, they are in a serious violation. When we talk about freelancers, we are not talking about millionaires, but about people who earn 300 to 400 dollars a month on the Internet – Pogacar emphasizes.
Suggestions have been heard these days that progressive tax rates should be introduced for freelancers in the future and that income up to a certain amount should not be taxed.
Milica Bisic, a tax expert and professor at the FEFA faculty, says that it is not possible to introduce a scale for only one category of taxpayers, and not for another. She believes that it is not a solution to introduce some special taxation for someone who did not pay taxes all the time, and it was necessary. What would that tax base be called, she asks. These are incomes, which are realized by independent activity.
– That independent activity does not have to be registered and that is not a violation as far as the way in which they performed the activity is concerned. But it is not possible to invent a special way of taxation just for that type of independent activity. If there is an attempt to change the tax system, then care must be taken about how it will affect other taxpayers. It is not possible for them not to be taxed 200 euros a month now, and for a smaller amount to be taxed for an employee in the company. The non-taxable amount of salary in Serbia is 130 euros. It would not be correct from the point of view of the fairness of the tax policy if those who earn equally were taxed unequally – Bisic believes.
The fact that the Tax Administration has just woken up does not justify taxpayers not to pay taxes. Our interlocutor explains that in the tax system, there is a possibility to request a deferral of tax payments. But it does not exist for such a massive situation because it implies that a certain taxpayer at some point could not set aside the amount he should pay and that he submitted a request for deferred payment.
– What could perhaps be the solution for this specific situation is to define an appropriate reprogramming procedure. That is, for two years to define the deferred payment and for those two years there is interest for that delay. If we take into account that they have not paid taxes for five years, in order to extend their deadline, it is possible to create a new framework that would facilitate their payment. Thus, a more favorable payment than the existing system could be considered. The situation itself reminded them that they should pay taxes, and it is not an idea to destroy them economically – Bisic states, Politika reports.
