TAX LEGISLATION – STIMULATION OF SMALL BUSINESS
On December 29th 2015 the National Assembly of Republic of Serbia passed a total of seven tax related laws aiming at more efficient tax legislation:
1) Law on Amendments of Law on Tax on the Use, Possession and Carrying of Goods
2) Law on Amendments of Tax Procedure and Tax Administration Act
3) Law on Amendments of Law on Capital Market
4) Law on Amendments on Corporate Profit Tax Law
5) Law on Amendments on Individual Income Tax Law
6) Law on Amendments on Law on Mandatory Social Security Insurance Contributions
7) Law on Amendments on Law on Republic Administrative Fees
Some of the more significant amendments concern stimulation of businesses, especially small businesses, as well as employment rates. Small companies and entrepreneurs are now encouraged to employ additional workforce through means of tax refund. That is to say that each small and micro company and each entrepreneur will receive a 75% tax refund for new employee salaries for the time period between January 1st 2016 and December 31st 2017 if they hire at least TWO new employees. Medium-size and large companies maintain their right to tax refund in the amount of 65% for 1 to 9 new employees, 70% for 10-99 new employees and 75% for 100 and more new employees (Individual Income Tax Law).
The newly amended Tax Procedure and Tax Administration Act (hereinafter: “TPaTAA“) proscribes now less severe penalties for failing to submit appropriate tax returns and/or pay taxes for both individuals and companies. Individuals are now to expect a minimum penalty of 5.000 RSD instead of the previous 50.000 RSD, and the minimum penalty for companies is now set at 100.000 RSD. Previously it was 150.000 RSD.
Further on, debts arising from social security contributions (i.e. failure to fulfil one’s obligation to pay contributions) can not come under the statute of limitations.
The order of enforcement of tax debts has been reversed through the amendments of TPaTAA and is now as follows: i) Main debt ii) Accrued interest iii)Costs of enforcement.
Following the legislative plan to stimulate further rise in employment and development of smaller businesses, Law on Mandatory Social Security Contributions introduced provisions supporting those of the Individual Income Tax Law. Each small and micro company and each entrepreneur will receive a 75% refund on payed social security contributions for new employees for the period starting from January 1st 2016 and ending with December 31st 2017, if they hire at least TWO new employees. Medium-size and large companies maintain their right to receive refund of the contributions in amount of 65% for 1 to 9 new employees, 70% for 10-99 new employees and 75% for 100 and more new employees.