Changes in tax regulations in 2018

The parliament of Serbia has adopted amendments to the tax and other laws that are important for the business of business entities. They are expected to be published soon in the “Official Gazette of RS”:

Law on Amendments to the Law on Value Added Tax;

Law on Amendments to the Law on Corporate Income Tax;

Law on Amendments to the Law on Personal Income Tax;

Law on Amendments to the Law on Contributions for Compulsory Social Insurance;

Law on Amendments to the Labor Law;

Law on Amendments to the Law on Payment Terms for Settlement of Financial Obligations in Commercial Transactions.

1. January 2018

1. The non-taxable amount of the salary is increased to 15,000 RSD.

Note: With the payment of earnings for December 2017, a non-taxable amount of 11,790 RSD is applied. The non-recoverable amount of 15,000 RSD is used from earnings for the month of January 2018. It is important to pay attention to this, because this is the opposite of the “normal” practice when using the non-taxable amount at the time of payment, regardless of the month in which the payment is made. It should be kept in mind that it was adopted and that from 01.01.2018. In 2006, the new minimum operating cost of 143 RSD is applied, many economic operators will have to adjust the employment contracts with the employee and determine the new amount of earnings. Earnings slightly above the minimum will now be around 27.500,00 RSD, without the past work of the employee. This means that the “safe zone” for the calculation will be about 30,000 RSD. The good news is that in calculating earnings, precisely because of this increase in the non-taxable amount of earnings to 15,000 RSD, it actually reduces the amount of taxes and contributions to earnings. For example: in the calculation according to the old one for the payment of a net salary of 30,000 RSD, 18,473 RSD of taxes and contributions were to be paid to the state, and for the new one they will pay 17,973 RSD. So, it saves about 500 RSD per employee. The increase will be felt by those employers who have paid the salary just above the minimum (25,000 to 27,000 RSD).

2. The employee must start working (to enter into work) only after applying for compulsory social insurance (penalties are from 300,000 to 1,500,000 RSD for legal entities, or from 50,000 to 500,000 RSD for entrepreneurs). So, in the inspection of the labor inspection, all employees must be registered and have a M form, signed work contract is not enough.

3. The employer is obliged to keep daily records of overtime work.

4. A new way to calculate the lowest and maximum monthly contribution base. The lowest and highest contribution base will be determined once a year on the basis of the average monthly salary paid in the period from December of the previous year to November of the current year. The new amounts of the base will be used from 1 January each year, except for the bases to be determined on the basis of the average salary from December 2016 to November 2017, which will be used from the first day following the day of publication in the “Official Gazette of the Republic of Serbia”.

5. Tax incentives and exemption from payment of contributions for newly employed persons – the deadline by which benefits may be extended from 31 December 2017 to 31 December 2019.

6. The method of calculation of tax depreciation for intangible assets is changed (valid for 2018). The enactment of a sub-legal act by the Minister of Finance is expected to close this issue.

7. No wage tax is paid on the employee’s earnings on the basis of cash relief for treatment, in the amount of actual costs of treatment, transportation and accommodation.

March 1, 2018

1. Obligation to register invoices in which debtors are entities of the public sector that make payments through the account maintained with the Treasury Department. Therefore, all business entities working with public enterprises will have to register their issued invoices.

1. April 2018

1. Taxation of income tax on the deduction for services of non-resident legal entities is limited only to certain services (market research, accounting and auditing services and other services in the field of legal and business consulting), but wherever they are provided or used. A more precise definition of these services will be done by a sub-legal act that will be passed by the Minister of Finance.

2. Payment of income tax with deduction and filing a tax return within three days from the date of payment (instead of the same day).

1. July 2018

1. The beginning of implementation of the obligation to submit a VAT bill review (POPDV form) is postponed for July 1, 2018. Pursuant to this amendment, the Ministry of Finance is also expected to amend the VAT Regulations Regulations.

1. October 2018

1. New tax incentives and exemption from payment of contributions for new business entities – for the profit of the founders, ie personal earnings of entrepreneurs and up to nine (9) newly employed persons.

1. January 2019

1. The right of registered entrepreneurs to keep books under the system of simple bookkeeping shall be removed.

2. The manner of exercising tax exemption for the circulation of goods that the passenger dispatches abroad in personal luggage changes. This issue will be regulated in more detail by a sub-legal act that will be adopted by the Minister of Finance.