Proposal for a COUNCIL DIRECTIVE on Faster and Safer Relief of Excess Withholding Taxes

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Tax newsletter – July 2023 ENG

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Poslovne vesti – jun 2023. ENG

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The third tax days were organized on November 25, 2021 by the Association of Tax Advisors of Serbia, whose members are the leading tax advisors of our company. This is just the first in a series of lectures we have held with the aim of improving the profession of tax advisor and raising awareness of practical problems caused by inconsistencies in tax regulations.

We share with you the material necessary to understand the specifics of the business of a permanent business unit in the Republic of Serbia:

Poslovanje stalne poslovne jedinice stranog lica ENG

The post Permanent Establishment in the Republic of Serbia appeared first on Profit Plus West Balkans.

• Under the amended Companies Act and the Registration with the Companies House Act, business entities will have the opportunity to register electronically via a user application designed for the receipt of an electronic application and digitally signed electronic documents, coupled with an electronic payment of the registration fee.
• The time limit of 18 (eighteen) months from the adoption of the relevant laws has been given to the Companies Register to adopt the new procedure, and this period ends around the middle of 2023.
• A copy of the Registrar’s decision shall be delivered to the registered electronic mail address of the entity, or the email address entered in the application.
• By this time, the Companies House will also have made possible the delivery of the Registrar’s decision to the Unique Electronic Mailbox of the entity provided it is a registered user of e-government services.

Kind regards,

PROFIT PLUS WEST BALKANS D.O.O. BEOGRAD

78, Vojvode Stepe Street, apartment no. 10, 2nd floor, 11042 Belgrade, Republic of Serbia

Tel: +381 11 4252 150

Fax: +381 11 4252 160

Email: office@profitplus.rs

Website: www.profitplus.rs

The post Business Newsletter – November 2021 appeared first on Profit Plus West Balkans.

 On 28th November 2021 the following laws have been amended:

1. Personal Income Tax Act;
2. Compulsory Social Security Contributions Act;
3. Corporate Income Tax Act;
4. Property Taxes Act; and
5. Tax on Using, Holding and Carrying Goods Act.

 Below is a brief summary of the major amendments to these laws, and a reminder of the recently amended Fiscalization Act.

2. PERSONAL INCOME TAX ACT

 The most important changes to the Personal Income Tax Act (hereinafter the PIT Act), which is expected to take effect on 1st January 2022, include:

• increase in the non-taxable income to RSD 19,300;
• extension of the tax relief referred to in articles 21v and 21d of the PIT Act until the end of 2022;
• eligibility for tax relief of newly formed enterprises engaged in innovative activities concerning their employed founders’ earnings, as well as all companies established after 31st December 2021;
• extension of the tax exemption associated with the salary of qualified new employees until the end of 2025, with additional requirements being added to the list of qualifying conditions;
• a new tax relief for newly employed individuals who are not insured as employees, entrepreneurs or founders of their respective companies between 1st January 2019 and 28th February 2022;
• new tax relief for legal entities doing research and development in the territory of the Republic of Serbia as part of their business activities, effective as of 1st March 2022;
• an exemption from tax on capital gains for taxpayers who make a non-monetary contribution of capital to a resident company (based in Serbia) in the form of their entire copyrights, related rights and industrial property rights;
• a reduction in taxable income used to calculate the annual income tax of individuals under the age of 40 (forty);
• granting an exemption from taxation for a fee earned by a student learning in an employment setting as a material and financial security.

3. COMPULSORY SOCIAL SECURITY CONTRIBUTIONS ACT

The crucial modification to the Compulsory Social Security Contributions Act, scheduled to apply after 1st January 2022, is the reduction of the rate of contributions for old-age and disability insurance from the current 25.5% to 25% in favour of employer.

We remind you that this is yet another in a series of decreases in the rate of contributions for old-age and disability insurance designed to reduce the amount of the tax burden assumed by employers in paying salaries.

4. CORPORATE INCOME TAX ACT

The Government has proposed to amend Article 30 of the Corporate Income Tax Act (hereinafter the CIT Act) by allowing a taxpayer company to exclude from its taxable income the capital gain generated by converting its intellectual property rights (copyrights, rights related to copyright, a well as rights associated with an invention) into the capital of a resident legal entity, on the condition that the resident legal entity does not alienate such acquired rights within a period of 2 (two) years following the acquisition thereof, nor assign those rights within the same time period (fully or in part) at a price lower than the one that would be determined by applying the arm’s length principle, if the assignment was made to a related party as defined in Article 59 of the CIT Act.

The application of the amended Article 30 of the CIT Act should commence with the assessment, calculation and payment of the tax liability for Fiscal Year 2022, and/or a tax period beginning in 2022.

5. PROPERTY TAXES ACT

The key changes to the Property Taxes Act, likely to be applied after 1st January 2022, comprise the following:

• The base for calculating gift and inheritance tax as well as absolute rights transfer tax in transactions involving the transfer of ownership of a used motor vehicle is the value determined by applying the formula including the displacement, engine power and age coefficient of the vehicle.
• In the case of a paid transfer of property rights over a used motor vehicle, transfer tax is payable by the buyer, and if the transfer is made between non-taxable persons who are individuals, no tax return to determine the amount of transfer tax needs to be filed but the tax is determined and paid by the process of self-assessment, unless there is a tax exemption in place – application starts on 31st March, 2022.
• A local unit of the tax authority shall be responsible for determining the inheritance and gift tax, as well as transfer tax, for an open-end fund, and/or alternative investment fund, which is not a legal entity.
• The date after which local units of self-government are required to determine, collect and oversee the inheritance and gift tax and transfer tax is pushed back to 1st January 2023. So, until 31st December 2022 all of the activities – assessment, collection and administration of tax – will be done by the Tax Administration.

6. TAX ON USING, HOLDING AND CARRYING GOODS ACT

A single amendment to the Tax on Using, Holding and Carrying Goods Act includes a higher percentage of the reduction in the amount of tax on the usage of motor vehicles that applies to passenger vehicles which are between 5 and 20 years old and have an engine displacement above 2.000cm³.

The above provision is scheduled to take effect on 1st January 2022.

7. FISCALIZATION ACT

Please be reminded that by amending the Fiscalization Act the legislators have put in place a transitional period between 1st November 2021 and 30th April 2022.

This allows the affected taxpayers to switch to the new model at their own pace, which means gradually and using the available technical resources. As a result, taxpayers subject to fiscalization, especially retailers operating in multiple locations, will be able to go on with their business activities as usual, without any disruptions.

Accordingly, the Fiscal Cash Registers Act shall cease to be valid on 1st May 2022.

Kind regards,

PROFIT PLUS WEST BALKANS D.O.O. BEOGRAD

78, Vojvode Stepe Street, apartment no. 10, 2nd floor, 11042 Belgrade, Republic of Serbia

Tel: +381 11 4252 150

Fax: +381 11 4252 160

Email: office@profitplus.rs

Website: www.profitplus.rs

The post TAX NEWSLETTER – November 2021 appeared first on Profit Plus West Balkans.

DEADLINES FOR FILING FINANCIAL STATEMENTS

Dear Sir/Madam,

Please be reminded that the Accounting Act imposes strict deadlines for filing financial statements due for publication:

• Legal entities and/or entrepreneurs must submit their regular annual financial statements for the reporting period to the Business Registers Agency (hereinafter the Agency) for statistical purposes and in order to be published by 31st March of the following year.
• Legal entities whose accounting period differs from the calendar year must submit their regular annual financial statements for the reporting period to the Agency to be published within 3 (three) months of the balance sheet date. Regardless of this special deadline for final financial statements, financial statements intended for statistical purposes for the current year need to be filed to the Agency by 31st March of the next year.
• Entities required to produce consolidated financial statements have to do it before 30th April of the next year.
• Special-purpose financial statements are due to be filed within 60 days of the balance sheet date.

As you already know, once the financial statements are imported into the special information system of the Agency, they need to be signed using a qualified electronic signature, i.e. certificate, of the legal representative and transmitted to the Agency in electronic form.

The due date for regular annual financial statements for Fiscal Year 2021 being 31st March 2022, we kindly remind you to check the validity of your qualified electronic signature now, so as to make sure it is ready to use at the time of signing. 

Best regards,

PROFIT PLUS WEST BALKANS D.O.O. BEOGRAD

78, Vojvode Stepe Street, apartment no. 10, 2nd floor

11042 Belgrade, Republic of Serbia

Tel: +381 11 4252 150

Fax: +381 11 4252 160

Email: office@profitplus.rs

Website: www.profitplus.rs

The post Business News, October 2021 appeared first on Profit Plus West Balkans.

On 5th October, 2021 was published the Amended Rulebook on Transfer Pricing and the Methods Used to Determine „Arm’s Length“ Prices Charged Between Associated Entities (hereinafter the Transfer Pricing Manual). The Transfer Pricing Manual came into effect on the eighth day after its publication in the „Official Gazette of the Republic of Serbia“ issue 95/2021, which fell on 13th October 2021.

The major change to the Transfer Pricing Manual involves the definition of the requirements of the CbC report. The need to regulate the CbC report in a by-law was set out in the Corporate Income Tax Amendment Act dated December 2020.

THE ULTIMATE MOTHER COMPANY AND MEMBERS OF A GROUP

The ultimate mother company which qualifies as a tax resident shall submit an annual report to the relevant tax authorities with the following data:

1) aggregate information on the amount of revenue, profit and/or loss before taxation, calculated and paid tax on corporate income, registered capital, retained earnings, number of employees and tangible assets other than cash or cash equivalents for any tax jurisdiction in which the international group is operating;

2) identification of every member within an international group, including the country in which such member is a tax resident in line with the rules in place in that country (of residence), as well as the country in which such legal entity has been founded, if the country of incorporation differs from the country of residence, as well as the data on the predominant trade(s) of the member of the international group.

A member of an international group is:

1. any separate legal entity within an international group that is included in the consolidated financial statements of the international group, or would be included in such a report if it were a publicly traded entity on a regulated market in the Republic of Serbia or elsewhere;
2. any separate legal entity within an international group that is excluded from the consolidated financial statements of the international group based solely on the size or materiality criteria;
3. any permanent establishment of a member of an international group which is obliged to prepare separate financial statements in compliance with the accounting or tax regulations of the tax jurisdiction to which it belongs, or in conformity with the general acts of the international group.

The ultimate mother company shall present the data on its permanent establishment in line with Paragraph 1 of this Article for the tax jurisdiction in which that fixed place of business is located, irrespective of the tax jurisdiction of the member of the international group of which it is a part.

If a member of an international group is a tax resident in more than one country or tax jurisdiction, the tax residency of that member shall for the purpose of the annual report be determined on the basis of bilateral tax treaties between those countries.

CONTENTS OF THE CBS REPORT

A CbC report must include the following information:

1) Table 1 – overview of the distribution of income, taxes and business activities of members of an international group in their respective tax jurisdictions;

2) Table 2 – list of all members of an international group, classified according to their tax jurisdiction;

3) Table 3 – additional information.

The report will only be accepted in paper form.

PROFIT PLUS WEST BALKANS D.O.O. BEOGRAD

78, Vojvode Stepe Street, apartment no. 10, 2nd floor

11042 Belgrade

Republic of Serbia

Tel: +381 11 4252 150

Fax: +381 11 4252 160

Email: office@profitplus.rs

Website: www.profitplus.rs

The post Tax Newsletter, October 2021 appeared first on Profit Plus West Balkans.

Dear Sir/Madam,

Please be advised that the Draft Fiscalization Amendment Act has been formally introduced to the National Assembly of the Republic of Serbia.

The most relevant amendment to the current Fiscalization Act refers to the introduction of a transitional period lasting from 1st November 2021 until 30th April 2022. This will allow the affected taxpayers to switch to the new model in their own time, gradually and using the technical resources they have. As a result, taxpayers subject to fiscalization, especially retailers operating from multiple locations, will be able to continue with their normal business activities uninterrupted.

For that reason, the Fiscal Cash Registers Act shall cease to exist on 1st May 2022.

Sincerely yours,

PROFIT PLUS WEST BALKANS D.O.O. BEOGRAD

78, Vojvode Stepe Street, apartment no. 10, 2nd floor

11042 Belgrade

Republic of Serbia

Tel: +381 11 4252 150

Fax: +381 11 4252 160

Email: office@profitplus.rs

Website: www.profitplus.rs

The post Tax Newsletter, September 2021 appeared first on Profit Plus West Balkans.

WHO MUST HAVE A FISCAL CASH REGISTER

The new fiscalization model introduces a broader scope of entities that must conform with the fiscalization  requirements, plus launches an entirely novel technical solutions compared to the current model.

To support the new Fiscalization Act, the government enacted a series of bylaws which bring new rules regarding  fiscal devices, fiscal receipts, use of the security element, and the preparations for the shift to the new model of  fiscalization and the inclusion of new taxpayers therein.

Furthermore, the new Decree Defining the Professions Which Are Not Required to Record Their Retail Sales Using a Fiscal  Device allows for a much smaller number of exceptions from the obligation to record retail transactions in relation to  the current status.

A fiscal cash register is mandatory for all small trading companies and sole traders, proprietors of sole traders  operating through a kiosk and similar businesses (newsagent’s), sole proprietorships and hospitality and catering  establishments paying lump sum tax, as well as other taxpayers engaged in the retail sale of products or services to  individual customers.

WHO IS EXEMPT FROM HAVING TO USE A FISCAL CASH REGISTER

Fiscal cash register is not a requirement for the following types of taxpayers and business activities:

• Sale of passenger tickets for road, railway and air travel;
• Transport of merchandise by road;
• Taxi transfers;
• Services offered by banks and other financial organisations, insurance and reinsurance, postal services;
• Tour operators and travel agencies;
• Religious organisations;
• Health institutions charging copayments to insured persons for their services;
• Lawyer services;
• Persons selling icecream, popcorn, lottery tickets and newspapers (newsboys) on the street;
• Sale of products through printed and electronic media involving cash-on-delivery orders;
• Shoeshiners and porters;
• Goods sold via vending machines.

WHERE TO OBTAIN INFORMATION ABOUT FISCALIZATION AND FISCAL CASH REGISTERS

Taxpayers are encouraged to seek all the necessary information about fiscalization, licenced manufacturers, authorized  service centers etc, as well as the time frame for implementing fiscal cash registers and recording sales transactions at a  local branch and/or organisational unit of the Tax Administration.

There is a time slot between 15th October 2021 and 31st January 2022 for taxpayers to apply for a government subsidy to  help them buy a novel device designed to be used as an instrument in the new fiscalization practice. Such persons will  receive 100 euros from the government per device and business location. Taxpayers can count on 200 euros in government  grants, with the amount multiplied by the number of individual retail stores.

Although the new fiscalization model was intended to kick off on 1st January 2022, it was nevertheless amended to include a  transitional period in which the old and new systems coexist side by side, allowing the taxpayers to get accustomed. This  transition to e-fiscalization will last from 1st November 2021 to 30th April 2022.

Anyone interested in receiving a grant from the Government of the Republic of Serbia consisting of 100 euros per fiscal  device and store should apply between 15th October 2021 and 31st January 2022 on the website of the Tax Administration. By  failing to do so, the company forfeits its right to a government grant related to fiscalization.

Entities which are not registered for VAT will receive a 20% higher subsidy to install a fiscal cash register, due to their inability to use input VAT, as a means of reimbursement for the anticipated expenses.

The money will be paid directly to each taxpayer to cover for the expenses of securing the necessary device. There will be no  additional expenses for business entities implementing the system.

All those who report the locations of their business units will after 1st November 2021 receive in their tax mailbox on the  ePorezi portal an electronic invitation to apply for security elements that will be provided by the Tax Authority free of  charge.

The Tax Authority has published the Technical Guide Outlining the Conditions and Characteristics of the Elements of the  Electronic Fiscal Device For the Purpose of Being Approved For Use In the e-Fiscalization System.

This guide comprises a glossary of terms, a section on electronic fiscal devices (EFD), with subsections detailing the security  element, processing unit of fiscal receipts and electronic system used for issuing receipts, as well as a section on fiscal  receipts, their content and types.

The  guide  can  be  downloaded  from  the  website  of  the  Tax  Authority  at  the  following  link:  https://www.purs.gov.rs/sr/fiskalne-kase/pregled-propisa/tehnicki-vodic/7162/tehnicki-vodic-sa-uslovima-i-karakteristikama-  elemenata-elektronskog-fiskalnog-uredjaja-radi-odobravanja-za-upotrebu-u-sistemu-e-fiskalizacije.html.

TIME LIMIT TO CONTRACT AUDITING WORK

A shareholders’ assembly and/or another body named in a general act of the entity undergoing an audit shall select an  auditing company to review its financial statements for Fiscal Year 2021 no later than 30th September 2021.

If the entity’s financial year differs from the calendar one, a shareholders’ assembly and/or another body specified in  the general act of the company shall choose an auditing firm at least three months before the expiry of the  established financial year to which the audit refers. For example, if regular annual financial statements are made as  at 31st October 2021, the final deadline to choose a contractor to perform the audit is 31st July 2021.

Newly formed entities are incapable of complying with the requirement indicated in Paragraph 1 of Article 32 of the  Auditing Act (i.e. they cannot hire an auditing company by 30th September 2021), because they cannot assess the size  of the company (i.e. determine whether it is a micro, small, middle-sized or large legal entity) before the end of 2021.  The law provides for an extension of the deadline to choose the right supplier to audit consolidated financial  statements until 30th November 2021.

PRACTICAL APPLICATION OF ELECTRONIC INVOICES

COMMENCEMENT DATES OF THE ELECTRONIC INVOICING ACT

Here are the commencement dates for the various requirements outlined in the Electronic Invoicing Act:

• 1st January 2022 – a public enterprise must receive and store electronic invoices;
• 1st January 2022 – a public enterprise must issue electronic invoices to another public enterprise;
• 1st July 2022 – a public enterprise must issue an electronic invoice to a private company;
• 1st January 2022 – a public enterprise must electronically record its value added tax calculations;
• 1st January 2022 – a private enterprise must issue electronic invoices to a public enterprise;
• 1st July 2022 – a private company must receive and store electronic invoices issued by a public enterprise, as well as the electronic invoices issued by a private company;
• 1st January 2023 – electronic invoices must be issued and stored for transactions between two private companies;
• 1st January 2023 – electronic record-keeping of VAT, save from the transactions in which one of the parties is a public enterprise.

It is worth noting that according to Article 23 of the Electronic Invoicing Act, as of 31st December 2021 the following  provisions of the Deadlines to Settle Monetary Liabilities in Commercial Trasactions Act („The Official Journal of the Republic  of Serbia“, issue 119/2012, 68/2015, 113/2017 and 91/2019) are rendered invalid with respect to the following:

• Central Registry of Invoices – To be erased – Item 9 of Article 2 of the Act;
• Manner and/or process of registering invoices in the Central Registry of Invoices – Article 4a of the Act;
• Manner and/or process of settling the invoices previously registered in the Central Registry of Invoices – Article 4b of the Act;
• Penal provisions for the registration and payment of invoices in the Central Registry of Invoices– Paragraphs 6 and 7 of Article 12 of the Act;
• Manner and/or process of registering electronic invoices in which public entities are debtors – Article 4v of the Act;
• Process of accepting and settling an electronic invoice – Article 4g of the Act.

RECORD-KEEPING AND REPORTING ON WASTE STREAMS

The Government of the Republic of Serbia passed the Decree amending the Decree on the products which become  specific waste streams, the form used for day-to-day record-keeping of the quantity and type of produced and imported  products and on the annual report, manner and deadlines for filing the annual report, on the entities required to pay the  fee, the criteria for the calculation, amount and method of computing and paying the fee („The Official Journal of the  Republic of Serbia“, issue 77/21, hereinafter: the Amending Decree).

The Amending Decree came into force on 7th August 2021.

The key change outlined in the Amending Decree is the removal of the obligation to file the annual report in paper

form beginning with the report for Fiscal Year 2021. Monthly reporting obligation remains in place.

The annual report shall be submitted to the Environmental Protection Agency (hereinafter: the Agency)  electronically, by entering data into the information system of the National Registry of Pollution Sources, in line with  the regulations governing electronic documents, electronic identification and confidential services in electronic  transactions, by 31st March of the current year using data from the previous year.

If the reporting entity did not import and/or manufacture products that become specific waste streams during the  year for which data is being supplied, they need to send a statement to that effect to the Agency.

This statement, provided it has been signed with a qualified electronic signature of an authorized person or their  authorised representative, should be delivered as an electronic (PDF) document to the appropriate electronic mail  address published on the web portal of the Agency until 31st March of the current year for the previous year.

THE EFFECTIVENESS AND APPLICATION OF THE DOUBLE TAXATION AGREEMENT WITH  SINGAPORE

The Convention for the Avoidance of Double Taxation Between the Government of the Republic of Serbia and the Government of  the Republic of Singapore (hereinafter: Singapore) for the Avoidance of Double Taxation with Respect to Taxes on Income  and for the Prevention of Tax Evasion and Tax Avoidance (hereinafter: the Convention) came into effect on 16th August  2021.

The Convention shall be applicable in the Republic of Serbia:

1. With respect to taxes on income realised in each tax year starting on or after 1st January 2022;
2.  In relation to Article 25 (Exchange of notices) of the Convention, for the requests filed on or after 16th August 2021 with  respect to the notification relating to tax periods beginning on or after 1st January 2022; or if there is no tax period, for  all tax liabilities incurred on or after 1st January 2022.

PROFIT PLUS WEST BALKANS D.O.O. BEOGRAD

78, Vojvode Stepe Street, apartment no. 10, 2nd floor  11042 Belgrade

Republic of Serbia

Tel: +381 11 4252 150

Fax: +381 11 4252 160

Email: office@profitplus.rs

Website: www.profitplus.rs

The post Business News, September 2021 appeared first on Profit Plus West Balkans.