Amendments to VAT Law in April

The amended VAT Law is supposed to come in effect on 1st April. According to the amendments, there will be no double taxation, as well as no tax applied to services that businesses are rendering to foreign companies.

These are the three most important amendments:

  1. Elimination of double taxation

According to the current version of the VAT Law, the general rule of thumb is that provision of services is taxed according to the location of the service provider, regardless of services being rendered to taxpayers or those who are not. This resulted in double taxation.

“We are talking about harmonizing this law with the relevant EU one with the view of avoiding double taxation, or double exemption as it has been the case so far”, says Nenad Nesovanovic from the American Chamber of Commerce in Serbia.

  1. Changing the way in which VAT is calculated

These amendments cover harmonizing the administration and partially changing the way in which businesses have been calculating VAT so far.

“Businesses will have to adjust their administrative activities and partially change the way in which they have been calculating VAT so far. There shouldn’t be any additional costs arising from this apart from those that stem from harmonizing their administrative activities”, Nesovic explains.

The Ministry of Finance has also suggested deferring the obligation to submit tax calculation along with the VAT tax filing until 1st January, 2018.

“This is a pretty big administrative change that is very demanding. Retailers will have to change their system in order to be able to compile tax filings in line with the new regulation”, Nesovic says and adds that the good thing is that businesses are given extra time to do this since the said changes bear certain costs.

  1. Part of Tax Administration is moving to Ministry of Finance

Along with amendments to the VAT Law, the Serbian government is also proposing amendments to the Law on Tax Proceedings and Tax Administration with the view of some segments of the Tax Administration moving to the Ministry of Finance as of 1st July this year. The aim of this proposal is to have a special department in the Ministry dealing with tax procedures as a second instance.

(Blic, 21.03.2017)

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