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Navigating bureaucratic hurdles: Challenges faced by small producers in Serbia

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I get the feeling that our government agencies do nothing but come up with ways to stifle small producers by burdening them with new obligations, often without valid reasons, but with hefty fines looming over them. State bureaucrats, convinced that all entrepreneurs are dishonest, seem determined to save Serbia from entrepreneurship.

Every email (formerly arriving in envelopes) from the government to our company immediately fills me with anxiety. I’m afraid to even open them. It’s a reflex I can’t control, built up over years of dealing with the problems these letters bring.

It seems like various government departments, at every level and independently of each other, are constantly plotting to make life harder for entrepreneurs. Perhaps there’s even a secret competition among bureaucrats to see who can make our lives more difficult, with a betting pool on the side.

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Each message brings a new obligation, with tight deadlines, added financial costs, significant time consumption that we should be spending on creating value, and of course, the looming threat of massive fines for non-compliance.

Let me highlight a few recent demands from the state that have been particularly frustrating for me lately.

Who’s going to tend the vineyard? Let’s start with the Ministry of Culture and their requirement to turn everything a company does into archival material. Imagine a small company with just two employees having to process and systematize all its documents since its establishment, which in our case is just ten years ago. And who’s going to tend to the vineyard, prune it, package the wine, sell it, do the accounting, and…

Then there’s the recent demand from the Ministry of Labor. We’re required to prepare a Work Safety Elaborate “in consultation with employees.” There’s more, but I didn’t have the energy to read it all the way through.

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The Ministry of Finance is a regular offender. I forward those emails to the accountant without even opening them, and she gently guides me through it over a drink later. It seems like they change the rules in the e-invoice and fiscalization system every week. Then they organize seminars where they respond to entrepreneurs’ questions by reading out paragraphs of regulations that we didn’t understand in the first place, which is why we asked.

The latest demand is that we have to upload invoices from suppliers who are not registered for VAT onto the portal by the tenth of the month, instead of the fifteenth. Of course, the suppliers who send us such invoices haven’t heard about this requirement since they’re not registered for VAT, so they send them whenever they want. There’s no reason for this change, but there’s a hefty fine for non-compliance.

The gold medal for bureaucratic hassle goes to the Ministry of Agriculture. They introduced e-agrar, requiring all documents to be submitted in electronic format, certified with a qualified electronic signature. If you receive a paper invoice and the supplier doesn’t have a qualified electronic signature, you need to take it to a notary and pay them to scan and certify it with their signature for you. You can’t do it yourself.

Many notaries refuse to do this because they say their qualified electronic signature is worthless without a qualified electronic seal, which they haven’t received yet. I’m really curious how many subsidy applications in the new round, which is supposed to start in February, will be rejected due to defective documentation.

I see several reasons for this situation.

Suspicious characters The main one is that the bureaucracy, which used to protect the state from corrupt private entrepreneurs in the socialist era, hasn’t transformed into a service for the economy and citizens. Those creating regulations still believe that all entrepreneurs are thieves and that they must impose a bunch of formal requirements on us to prevent theft. Of course, this doesn’t work, as we see from countless non-existent crops and cows for which people received subsidies.

An efficient system should involve minimal paperwork, basically just requiring a statement from the applicant that everything stated is true and accurate. Processing such requests should require ten times less bureaucracy compared to what’s currently being done. And that surplus could be transferred to inspection services, with massive inspections carried out in the field.

Falsifying an official document is a serious criminal offense, and if we add tax evasion, fraud, and more, business thieves face long prison sentences and confiscation of property. It’s enough to publish about ten cases annually of legally convicted individuals to instill fear in potential thieves.

And finally, let us work, small producers! The problem also lies in regulations being written as if only large companies with legal departments of dozens of employees operate in Serbia. Absolutely no consideration is given to the burden that small and medium-sized enterprises will bear, which today produce almost two-thirds of added value.

In agriculture, for example, it took a long time to amend requirements for food production in small households compared to those for large companies. In our wine industry, the state still stubbornly refuses to allow agricultural households to produce and sell wine, as is the case in all wine-producing countries in Europe. There is no rational explanation for this. When you ask, they simply can’t explain it. End of story.

The problem also lies in the lack of coordination among ministries. That unfortunate archiving law, initially with registries and specially secured rooms, was passed at the same time the state was rapidly moving towards digitalization of business, introducing e-invoices, e-agrar, and many other electronic services for businesses and citizens.

I could go on like this for another ten pages. But the essence is: let us, small producers, work! And if we steal, it can’t be much, because we’re small. Control us, punish thieves severely, but don’t burden us. I don’t have room in my income to employ another person just to deal with the state. And one is needed.

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