1. UPCOMING AMENDMENTS TO SEVERAL TAX LAWS
On 28th November 2021 the following laws have been amended:
- Personal Income Tax Act;
- Compulsory Social Security Contributions Act;
- Corporate Income Tax Act;
- Property Taxes Act; and
- 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
