The Serbian Ministry of Finance initiated on 1 October the public consultation on (i) Law on the Tax on Greenhouse Gas (GHG) Emissions; and (ii) Law on the Tax on Import of Carbon-Intensive Products (the Laws). The public consultation will last for 20 days, and the Laws are expected to apply as of 1 January 2026. Below is a short overview of the main provisions of these Laws:
- What is the GHG tax?
GHG tax is a tax on emissions of (i) carbon dioxide (CO2), (ii) nitrous oxide (N2O) and (iii) perfluorocarbons (PFCs). It is paid on (i.e. the tax basis is) the total quantity of emitted GHG, decreased for the quantity of the reference emission for a certain production process or activity (which will be determined by the Ministry for Environmental Protection). This tax basis is expressed in tons of CO2, or tons of CO2 equivalent (CO2eq) in the case of GHG emissions other than carbon dioxide.
The GHG tax is equal to EUR 4 per ton of CO2, or tons of CO2 equivalent (CO2eq), meaning that the amount of tax is obtained by multiplying the tax basis by EUR 4 (in RSD countervalue as per the middle exchange rate of the National Bank of Serbia on the day of submission of the tax return).
- Who will have to pay GHG tax – who is a tax obligor?
GHG tax obligor is a legal entity or entrepreneur which, in accordance with the climate change regulations, has the obligation to hold a GHG emissions permit and which performs one or more of the following activities:
- production of artificial fertilisers and nitrogen compounds;
- production of cement;
- production of raw iron, steel and ferroalloys;
- production of aluminium; and
- production of electricity.
- When is the GHG tax due?
The tax period is a calendar year, and the tax obligors will have to submit the regular GHG tax return and pay the tax by 31 May of the current year for the previous year.
- Tax credit and decarbonization incentives
The law envisages a tax credit available only to electricity producers. In particular, a tax credit in the amount of 20% of the financial means invested in the measures for the decrease of GHG emissions may be granted to the entities: (i) whose registered prevailing business activity is the production of electricity and (ii) which realised at least 80% of their total income from the production of electricity. The total amount of tax credit cannot exceed 80% of the tax obligation.
- What is the tax on the import of carbon-intensive products?
The import tax will apply import of carbon-intensive products like iron, steel, cement, fertilisers, and aluminium. Importers importing more than five tons of these goods will be taxed based on the emissions embedded in the production of imported goods, but may use tax credits if carbon charges have already been paid in the country of origin.
The tax period is a calendar year, and the tax obligors will have to submit the regular tax return and pay the tax by 31 May of the current year for the previous year. The tax is equal to EUR 4 per ton of CO2 equivalent (CO2eq) (in RSD countervalue as per the middle exchange rate of the National Bank of Serbia on the day of submission of the tax return).
The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.
