Serbia, Limitation on taxation extended for another year

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The Government of Serbia and the Ministry of Finance adopted the initiative of NALED and the Digital Community to extend the validity of Article 6 of the Regulation on flat-rate taxation and the limitation according to which flat-rate entrepreneurs’ tax liability could not be increased by more than 10 percent per year.

That solution will facilitate business for a large part of a total of 120,000 lump sums in Serbia, announced NALED.

As they state, they submitted the initiative due to the fear that, due to the change in the method of calculating taxes, the obligations of many entrepreneurs would be significantly increased, which, in the conditions of the global crisis, could affect the closure of their businesses or escape to the gray zone and the growth of the gray economy in Serbia.

Regulatory reform manager at NALED, Irena Đorđević, stating that entrepreneurs are a significant part of the economy, pointed out that they represent 48.8 percent of the total number of taxpayers and are also an important factor in terms of employment because together with their employees there are almost 400,000 of them. 

“That represents a fifth of the employees in the economy,” Đorđević stressed and added that it is necessary to provide them with a predictable and stimulating business environment in order to continue the positive trend of growth in the number of entrepreneurs.

In 2020, as stated in the announcement, almost 30,000 new entrepreneurial businesses were founded, last year 34,378, and already in the first half of 2022 another 20,247.

Đorđević says that in 2023, the next major reform that could help lump-sum entrepreneurs and “bookkeeping” entrepreneurs who do not pay themselves wages should be the improvement of the procedure for paying taxes and contributions.

NALED’s initiative is that these two groups of entrepreneurs pay their obligations to one instead of four payment accounts.

In the press release, they state that the analysis carried out by NALED as part of the StarTech program to support innovation and digital transformation of the Serbian economy showed that this reform would be very important, because states and entrepreneurs lose more than 260 million to correcting errors in tax and contribution payments and overbooking dinars.

Estimates show that each request for rebooking means an average cost of 5,280 dinars and requires a small amount of involvement of Tax Administration officials who have to compare payments and debts, make a decision and complete the bookkeeping.

That the number of errors is related to the number of payment accounts can be seen from the fact that the number of overbookings among lump sums and “bookkeepers” who do not pay themselves wages and have four payment accounts is 2.5 out of 10 entrepreneurs, while among entrepreneurs who pay personal earnings and have only two payment accounts, the number of submitted requests is 0.1 per 10 entrepreneurs.

Đorđević says that the assessment of the analysis is that entrepreneurs make more than 10 million payments annually, of which about 90 percent are made precisely by entrepreneurs who have four payment accounts.

According to the data for 2021, 50,000 requests for rebooking were submitted to the Tax Administration, which is less than 5 percent of the 10.7 million payments, but when we look at it in relation to the number of entrepreneurs, we see that we have two requests for rebooking for every 10 entrepreneurs.

According to the data of the Agency for Business Registers, 308,000 entrepreneurs are currently registered in Serbia.

The most numerous are lump-sum entrepreneurs, of whom there are more than 120,000, followed by self-paid entrepreneurs, who are half as many, RTV writes.

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