The Serbian Government has set two objectives when preparing for the economic assistance programme to mitigate the damage caused by the COVID-19 epidemic – safeguarding employment and supporting business liquidity.
All the presented measures have these two goals and it is with this logic that the government has devised activities relating to financing, tax relief or monetary contributions. These measures are available not only to companies and entrepreneurs with registered offices in Serbia, but also to bodies or offices representing foreign companies.
According to the Regulation published in the Official Gazette of the Republic of Serbia number 93/2019, banks, insurance companies, pension funds, leasing companies, financial services companies, electronic payment institutions and entities receiving state funding will not be eligible for these measures.
Companies that have not reduced the number of their employees by more than 10% since 15 March, i.e. since the declaration of a state of emergency, can obtain two types of support, one fiscal and the other monetary.
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For three months, starting with April salaries which will be paid out in May, companies and entrepreneurs can postpone the payment of their taxes and contributions until 2021, indicating 4 January 2021 as the last date of payment.
In addition, starting from May and until July 2020, each micro, small or medium-sized enterprise will receive a contribution of 30.008 dinars (equal to the national minimum wage) per month, paid directly into the company’s bank account, for each full-time employee. The only obligation is to inform the Inland Revenue, by 25th April, which bank account should be used for disbursement providing you have more than one.
Large companies (i.e. those that fall within two of the following parameters: more than 250 employees, €10 million turnover or more than 5 million worth of capital goods) will receive 50% of the sum for each employee.
The payment of advances on corporate income tax will be suspended until the date of submission of the corporate income tax return for 2020, i.e. up to and including the June 2020 instalment.
Basically, in May, June and July, a micro, small or medium-sized enterprise will not have to pay taxes and contributions on salaries for April, May and June 2020 and will postpone the payment of payroll tax and contributions until 2021.
Furthermore, in May, June and July, such enterprises it will receive 30,008 dinars per employee on condition that they have not laid off more than 10% of its workforce as of 15 March. In addition, the advance payments on corporate income tax are suspended for the instalments to be paid by 15 April, 15 May and 15 June 2020.
In the event that the economic support measures are by companies which are not entitled to them and are not subsequently paid back, the government has set up fines of between 30 and 70% of the total amount received, but not less than 500,000 dinars for companies and 100,000 dinars for small business owners. The fine for the company’s legal representative will be between 50,000 and 100,000 dinars.
Companies benefiting from the support measures cannot allocate monetary dividends until the end of 2020, but it is possible to distribute them in the form of shares.
SOFT LINES OF CREDIT
The Government will distribute soft loans to support the liquidity of enterprises both directly, through the Republic of Serbia Development Fund, and indirectly, by providing guarantees to commercial banks that will grant new loans.
24 billion dinars, equivalent to just over 200 million euro, has been allocated for direct financing and will be distributed according to demand until the funds are exhausted.
Here are the terms and conditions of these loans:
- repayment at 36 months with 12 months grace period, so the first 12 months are not paid in instalments which are repaid in the following 24 months;
- an annual interest rate of 1%;
- the funds are liquidated and repaid in dinars;
- the minimum amount is 1 million dinars for small businesses and 200,000 dinars for associations and cooperatives;
- the maximum amounts are 10 million dinars for micro-enterprises, 40 million dinars for small enterprises, 120 million dinars for medium-sized enterprises;
- the instalments are paid monthly;
- during the grace period only the disbursed capital is calculated;
- the fundamental condition for access to finance is to maintain the number of full-time employees registered as on 15 March 2020 or a that a company has not laid off more than 10% during the period of access to finance;
- the loan collateral could be bills of exchange and related authorization to collect the guarantor of the surety (if any), or mortgage the properties in the ratio of 1:1 to the value of the credit line granted, or pledge on the movable property equal to a market value of 1:1 with the value of the credit line granted, or bill of exchange and related authorization to collect the company’s owner, or a promissory note and the related authorization for collection of the company owner must be presented with one of the guarantees listed above.
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