Last Updated 12 April 2020, 17:00 CET
The Government of Serbia adopted the Regulation on Fiscal Benefits and Direct Aid to Private Sector Entities and Financial Aid to Citizens to Mitigate the Economic Impact of COVID-19 (“Regulation”) on 10 April 2020, ten days after the announcement of the proposal of the Program of economic measures aimed at reducing the negative effects caused by the COVID-19 pandemic. The Regulation provides tax benefits and direct payments to private sector companies.
Main tax benefits provided by the Regulation are:
- payment of salary tax and social security contributions that are due in the period between 1 April and 30 June may be deferred to 4 January 2021,
- corporate income tax (CIT) advance payment due on 15 April, 15 May and 15 June may be deferred until 29 June 2021 (the date of submission of the final corporate income tax return for 2020),
- deferred taxes and contributions may be paid in 24 monthly instalments without interest, under conditions further to be set by the Minister of Finance.
- private entities, other than large companies, may receive direct aid in the amount of three minimum salaries per each employee employed in March, April and May (in the amount calculated as a product of the minimum salary for March and the number of full-time employees in March, April, and May, respectively)
- large companies may receive 50% of the minimum salary per employee that was absent from work due to an interruption of work based on a decision of the employer (unattributable to that employee) or under a competent authority (in the prevention of health risks). Large companies have to submit in hardcopy a list of employees subject to the aid no later than the 20th each month for the aid in the next month.
Who can use the benefits
Tax benefits may generally be used by all resident companies (including branches and representative offices of foreign companies), except banks, insurance, and reinsurance companies, pension fund management companies, financial leasing companies, payment, and electronic money institutions. Large companies may use limited benefits. Benefits are also available to entrepreneurs, registered farmers, and lump-sum entrepreneurs.
Companies may apply for benefits provided they have not reduced the number of employees by more than 10% from 15 March 2020 until 10 April 2020 (employees engaged under fixed-term employment contract expiring after 15 March 2020 are not relevant). Also, companies will have to maintain the existing number of employees in the three months following the last instalment of direct aid (minimum salaries) in order to avoid consequences and responsibility for the misuse of funds.
In order to receive direct aid, companies will have to open special purpose accounts. Accounts should be opened in communication between the Tax Administration, the National Bank of Serbia and a commercial bank holding the companies’ current accounts.
Companies using benefits are not allowed to pay dividends until the end of 2020.
How to apply for benefits
Companies apply for benefits by filling relevant boxes in the tax return for withholding taxes for salaries (Form PPP-PD). By doing this, the entity simultaneously applies for delay of payment of corporate income tax advances, salary tax, and social contributions, as well as for payment of direct aid.
Penalties for misuse
Taxpayers who reduce the number of employees by more than 10% in three months after receipt of the last payment of minimal salary, or who pay a dividend until the end of 2020 will face the following consequences:
- return of received funds to the state budget within five days,
- pay deferred taxes and pay the interest for late payment of taxes,
- taxpayers may be liable for tax misdemeanours and fined by a fine in the range of RSD 500,000 (approx. EUR 4,300) up to 70% of received funds.
In addition to the benefits related to direct taxes, the Regulation allows donation contributors, VAT taxpayers, to be exempt from VAT on the donations made to the Ministry of Health, Fund for Health Insurance and health institutions. Donors may deduct input VAT for purchase of donated goods that they donated during the state of emergency.