Besides getting paid for their work, salaries that are paid out in Serbia also cover the costs of health care, pension, possible disability allowance, the state, unemployment and others.
For every 100 dinars of salary in Serbia, tax and total contributions amount to almost 62 dinars. The state has reduced the tax burden from 63% in 2017 to just over 61% this year. And it will continue to decrease it, as repeatedly announced by the Ministry of Finance. The total wage tax remains, however, one of the major weaknesses of the Serbian economy.
The business community in Serbia has cited the substantial salary tax as one of the biggest causes of the shadow economy in Serbia and one of the biggest corporate burdens, according to a survey by NALED from 2014 to date.
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One of the recommendations in NALED’s Grey Book relates to reducing salary tax and contributions. In a survey conducted last year, as many as 79% of respondents, mostly business people, indicated this as a big problem.
25.5% of wages in Serbia goes towards pension disability insurance, 10.5% to health insurance, while the net income tax is 10%.
Changes to the law have reduced pension and disability insurance contributions from 26% to 25.5%. The obligation to pay 0.75% unemployment benefits at employers’ expense has been abolished and the non-taxable monthly salary has increased from 15,300 to 16,300 dinars in 2020.
Looking at the region, only Bulgaria and North Macedonia are in a better position than Serbian workers and companies. In practice, salary tax in Bulgaria is 52% and 48% in North Macedonia. Other countries have a higher salary tax, some up to 79%, which is 17% higher than in Serbia.
Countries and salary tax in percentages:
The Czech Republic 78%
North Macedonia 48%
NALED also states that a further reduction in the salary-related tax is necessary to continue combating the shadow economy.
This post is also available in: Italiano