Government considering ways to lower income tax

The Serbian government is currently considering ways how to reduce salary tax and contributions, as well as to increase the non-taxable part of the wage, which currently stands at 15,000 dinars.

Finance Minister Sinisa Mali has announced that the state will reduce income as of the beginning of next year, with the Government of Serbia already forming a working group that has begun finding ways of reducing this tax and identifying segments in which the reduction would be possible.

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“We are currently considering all possible aspects, and we are also working on projections and calculating how much we can reduce individual tax burdens as much as possible”, a government source has said for the Blic daily. “There is absolutely a possibility of reducing income tax and contributions, which are borne by employers, as well as increasing the tax-free part of the salary”, the source added.

 The source continues to say that the exact level reduction in income tax and the increase in non-taxable part of the wages depend on how much there is available budget funds.

“For now, there is room for reduction, but are currently calculating how much of the budget funds can we release for this purpose”, the source concluded.  

Current income tax in Serbia stands at 63 percent of the average net wage, which means that for every 100 dinars of net salary, employers have to pay 63 dinars in tax and contributions to the state budget.

Serbia is below the average in Central and Eastern Europe when it comes to income tax and contributions with the average in CEE countries being 68 percent, with the exception of Croatia where it is 62 percent. In Macedonia, income tax ranges between 35-37 percent, in Hungary 42, Bulgaria 20, and in Bosnia and Herzegovina between 20 to 25 percent.

 The Fiscal Council has recently said that salary contributions in 2018 could be reduced from 2 to 3.5 percent and added that the state budget can spare 15 billion dinars to allow for the tax to be reduced from 64 to 62 percent, adding that releasing 25 billion dinars from the budget for this purpose would allow the tax to be reduced to 60.5 percent.

 One of the owners of the company Re3 Product, Aleksandar Solarevic, told the Blic that the reduction in the income tax would favourably affect the economy and business owners. “We will thus save jobs, attract more investors and be more competitive,” Solarevic said and added that Serbia hds a major problem with the workforce outflow.

The Director of the Ukus footwear factory, Mišo Petraš, said that the money that would be saved after the reduction in the income tax would be allocated to increasing employee wages, because, as he said, the costs of gross wages were the biggest overhead in business.

 Nebojsa Atanackovic from the Union of Employers of Serbia said that such a measure would help reduce undocumented work.

According to the Blic, the Ministry of Finance and the Serbian Tax Administration are also working on expediting VAT refunds, with the current deadline for refund being 45 days. The first positive effects for businesses could happen from September.

 “We are analyzing all the circumstances that lead to the delay in VAT refunds. In the next month or so, we would have identified key problems and we will know, immediately afterwards, how much we can expedite the VAT refund process”, a government source told the Blic daily.

(021.rs, 15.07.2018)

http://www.021.rs/story/Info/Srbija/192589/Vlada-razmatra-kako-da-smanji-porez-na-plate.html

This post is also available in: Italiano

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