It is no big secret that, as of next year, businesses will pay less in taxes to the state because this tax relief has already been confirmed. However the details of this move are still not revealed.
Two days ago, Prime Minister Ana Brnabic said that, in collaboration with the Fiscal Council, the Serbian government “will take under consideration cutting back on corporate taxes that would not seriously jeopardize the state budget”.
“I do hope that, in the beginning of December, we are going to officially announce our decision to increase the non-taxable part of salaries. This is definitely going to happen, but I cannot tell you right now how much will the cut be. We have promised this to employers after they agreed to increase minimum wage”, Brnabic added.
There is enough money in the state budget to withstand this tax relief, and even the ever-conservative Fiscal Council confirmed there was 80 billion dinars in the 2018 budget allocated for this purpose. Most of this money (between 55 and 60 billion dinars) will go towards covering the cost of higher pensions and civil servant salaries which leaves 20 billion dinars for tax reliefs.
However, the 2018 budget still hasn’t been drawn up and the IMF needs to approve these measures first.
Currently, the non-taxable part of salaries stands at 11,790 dinars. According to the calculations done by the Fiscal Council, if this non-taxable part is to be raised to 18,500 dinars in 2018, those employers with minimum wages would benefit the most from it considering that the employers have to pay between 55% and 65% on top of salaries towards various taxes and contributions.
A member of the Fiscal Council, Nikola Altiparmakov says that workers with below average and minimum wages stand to benefit the most from the tax cuts while Dragoljub Rajic, from the Business Support Network, reminds that the salary tax and contributions are among the highest in Europe at the moment because employers have pay between 64 and 67 dinars on top of every 100 dinars they pay out to their employees.
Rajic adds that the tax cuts would have the best impact if the salary tax and contributions were to be reduced by a third, and not by only several percent as announced.
“Only if the tax cuts are increased by a third, employers would feel the real relief and we would become competitive in Europe, along with Slovakia, the Czech Republic and Hungary. In Bulgaria, for instance, salary tax is the lowest (20%), while in Albania it stands at 25%”, Rajic adds.
This post is also available in: Italiano