Minister of Finance Sinisa Mali and the President of the Chamber of Commerce of Serbia Marko Cadez have presented the measures to support the economy with the emergency created by the COVID 19 epidemic. The assistance in total is worth 5.1 billion euros, 11% of the national Gross Domestic Product.
The national economic support programme includes fiscal policy measures, direct support to private companies and other actions to support the companies with coping with the national and international economic crisis caused by the spread of the coronavirus. Financial assistance of EUR 100 for each adult Serbian citizen is also foreseen.
Programme of economic measures for reducing the negative effects of the Covid-19 contagion and to support Serbia’s economy
Tax policy measures
- Deferral of payment of payroll taxes and private sector contributions during the state of emergency, with a deferral of payment in instalments from 2021.
- Deferral of payment of advance income tax in the second quarter, VAT exemption for donations
- Direct aid to the private sector
- Aid to entrepreneurs subject to flat-rate taxation who pay effective income tax, micro, small and medium-sized enterprises in the private sector – support equal to the minimum wage (during the state of emergency – 3 minimum wages)
- Contribution to large companies in the private sector – consisting of the payment of 50% of the net minimum wage (during the state of emergency) for employees in the cases stipulated in Articles 116 and 117 of the Labour Law
Measures to preserve liquidity
- Programme of financial support to the economy during the Covid-19 crisis reimbursed through the Development Fund of the Republic of Serbia
- Guarantee scheme to support the economy
- Moratorium on dividend payments until the end of the year, except for public enterprises
- Fiscal stimulus – direct aid to all citizens over the age of 18 equal to a one-off payment of 100 euro
Companies and entrepreneurs are not allowed the following:
- During the state of emergency, they are not allowed to reduce the number of employees by more than 10% (excluding temporary employees whose contract expires during the state of emergency).
- Companies that suspended their activities before the declaration of the state of emergency, i.e. before 15/03/2020 are not eligible to benefit from the mentioned economic measures.
The measures in detail
The deferment of the payment of taxes and contributions on wages and salaries may last until the beginning of 2021, after which, at the taxpayer’s request, the possibility of a further deferment of payment of these costs for a maximum of 24 months without the obligation to pay interest is left open. The basic conditions for the implementation of this measure are identical for all employers, regardless of their economic power.
The payment of advances on business income due in the second quarter of 2020 will be postponed, without specifying at this stage whether they will have to be paid in the second part of the year or postponed further.
Donations are exempt from VAT, with the aim of increasing donations for initiatives to combat the spread of the virus and care for the sick.
Small business owners that pay flat-rate tax, micro, small and medium-sized enterprises will receive financial aid equal to the equivalent of a national minimum wage, i.e. 30,022 dinars (about 260 euro) per employee, for three months.
Large enterprises will get similar support but 50% of the minimum wage for each employee for three months.
Granting of loans for maintaining liquidity and working capital for small business owners, micro, small and medium-sized enterprises, agricultural enterprises and cooperatives, which are registered through the Development Fund of the Republic of Serbia.
Guarantee schemes for loans for the maintenance of liquidity and working capital for small business owners, micro, small and medium-sized enterprises and agricultural enterprises through commercial banks operating in the Republic of Serbia. RSD 264 billion (about EUR 2.2 billion) has been allocated to finance loans through the Development Fund and state guarantees to commercial banks.
Companies are not allowed to distribute dividends, with the exception of public companies.
One-off financial support of EUR 100 will be distributed to every Serbian citizen of legal age.
The guiding principles for devising these measures
Protecting jobs and preserving the tax base are the main objectives of the measures presented today. In essence, companies that have made more than 10% of their workforce redundant as a result of the crisis will not be eligible for the benefits, except if they laid-off workers who were on fixed-term job contracts that have expired during the state of emergency and have not been renewed. At the same time, the aim is to enable companies to withstand the impact of the crisis by supporting their liquidity and access to credit. A further objective is to curb the fall in domestic demand by helping micro-entrepreneurs and craftsmen, on the one hand, and ensuring continuity of income for the employed, on the other. Through the economic contribution to all adult Serbian citizens, the Serbian state will inject directly into the economy about 660 million euro.
The enterprises will receive the first third of the economic support around mid-May, then mid-June and finally mid-July, based on the verification of guaranteed employment levels.
In the last quarter of 2019, Serbia recorded gross domestic product growth of 6.2%. The first projections for 2020 foresee a decline in GDP of around 2%.
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