SERBIA: COVID-19 VAT IMPLICATIONS
SERVIA – update 22nd April
A VAT exemption for supplies of goods/services without consideration to the Ministry of Healthcare
The Serbian government has published a decree providing for a deferral of payment of salary tax and advance corporate income tax as follows:
– payment of salary tax and social security contributions due for March, April and May 2020 may be deferred until 4 January 2021; and
– payment of advance corporate income tax due on 15 March, 15 April and 15 May 2020 may be deferred until the final submission of the corporate income tax return for 2020.
The outstanding payments may subsequently be paid in 24 instalments with no late payment interest being imposed. Advance payments of lump-sum tax by entrepreneurs for March, April and May 2020 may be deferred until 4 January 2021, just as social security contributions on self-employed income. The outstanding payments may subsequently be paid in 24 instalments with no late payment interest being imposed. The fiscal deferral is granted to companies, entrepreneurs and branches, as well as representative offices established and registered with the competent authorities before 15 March 2020, or which became taxable persons for VAT purposes before that date.
The above fiscal measures do not apply in the following cases:
– companies that have dismissed at least 15% of their employees with a permanent contract between 15 March 2020 and 10 April 2020;
– entrepreneurs who temporarily stopped their activities before 15 March 2020; or
– dividends that are paid until 31 December 2020.
VAT exemption
From the date of the state of emergency (i.e. 15 March 2020) until the termination of the state of emergency, a VAT exemption applies for supplies of goods and services without consideration to the Ministry of Healthcare, the Republic Health Insurance Fund or a publicly owned health institution. For these supplies, separate records must be kept.
The above measures were gazetted by Decree no. 54 on 10 April 2020 and apply from that date.
Source Credit – IBFD
SERVIA – update 17th April
VAT exemption on supplies of goods and services without consideration to certain health institutions
Serbia published in the Official Gazette on 10 April 2020 the Regulation on benefits to private sector entities and financial assistance to citizens to mitigate the economic impact of COVID-19. For companies, the benefits include:
- a deferral of the payment of taxes and social insurance contributions on employee salaries and wages for the months of March, April, and May 2020, which can be deferred up to 4 January 2021, with the possibility of payment in up to 24 monthly installments; and
- a deferral of the payment of advance corporate income tax for the months of March, April, and May 2020, which can be deferred till the filing deadline of the annual tax return for the relevant year (i.e., the return for 2020), with the possibility of payment in up to 24 monthly installments.
To qualify, it is required that companies have not reduced their number of employees by more than 10% between 15 March and the date the Regulations entered into force (10 April 2020). Certain
entities are specifically excluded, however, including entities covered by the List of Beneficiaries of Public Funds, as well as banks, insurance and reinsurance companies, voluntary pension fund management companies, financial leasing providers, and payment institutions and electronic money institutions.
The regulation also provides other relief benefits, including grants for payments to employees in May, June, and July 2020. For SMEs, the grants are equal to the minimum net earnings for March 2020 multiplied by the number of full-time employees. For large companies, the grants are equal to 50% of the minimum net earnings for March 2020 multiplied by the number of full-time employees that have been issued a decision to terminate their work.
The grants must be paid to employees in full. Companies taking advantage of the payment deferral and the grants will lose the benefits in certain cases, including where there is a 10% or greater reduction of employees in the period 15 March until three months after the final grant is paid.
Further, companies are not allowed to pay any dividends until the end of 2020 (except for dividends paid as shares). In the event that benefits are lost, deferred tax liabilities will become due, with interest, and grants received must be repaid, also with interest. Further penalties may also apply.
Lastly, the regulation provides a VAT exemption on supplies of goods and services without consideration to certain health institutions. Taxpayers making such supplies are allowed to deduct input VAT.
The exemption applies from 15 March until the state of emergency is ended.
Source Credit – Orbitax
SERVIA – update 7th April
Serbia introduce reduces on late taxes
Serbia declared a state of emergency due to the disease caused by the virus COVID 19, the Government of the Republic of Serbia introduced a measure that reduces the interest rate to 1.75 % on late taxes and other tax payments during the 3-month period.
Source Credit – Global VAT Compliance
Related services: