Was there ever an intention to cut excise duties on petroleum products by 60 per cent, as Serbian President Aleksandar Vučić unequivocally claimed on 20 March? He even stated that this would happen immediately.
Or was such a promise merely intended to serve as part of the pre-election campaign ahead of local elections in 10 municipalities in Serbia, especially given that the intensity of the campaign resembled that of a general election?
If such an intention did exist, what then prevented Aleksandar Vučić from delivering on his promise? Nearly a month later, excise duties have been reduced by 25 per cent – nowhere near the promised 60 per cent.
Was the obstacle encountered because such a decision is legally problematic? Or fiscally problematic, since reducing excise duties means lower budget revenues on that basis? Or is it problematic due to arrangements with the International Monetary Fund (IMF) – particularly as an IMF mission is due to arrive later this month for talks with Serbia’s fiscal and monetary authorities?
A compromise solution for excise duties
Ahead of the Easter holidays, the Serbian government adopted a decision to reduce excise duties on petroleum products by 25 per cent – five percentage points more than the initial adjustment, and even beyond what is permitted by the Law on Excise Duties.
According to what was published in the Official Gazette, the government adopted a Regulation amending the Regulation on limiting the prices of petroleum derivatives. It stipulates that it will apply from 10 to 24 April, and that excise duties on unleaded petrol will amount to 54 dinars, and on gas oils 55.53 dinars.
On the same day, the government also adopted a Decision repealing the Decision on the temporary reduction of excise duties on petroleum products adopted in mid-March. That earlier decision was intended to remain in force until 15 April and had reduced excise duties by 20 per cent – the maximum permitted under the excise legislation.
This time, precisely because of that legal limitation, the Decision could not be extended or used to further reduce excise duties, as doing so would have violated the Law on Excise Duties.
Instead, Article 39 of the Law on Trade was used as a solution, which the government relied upon when adopting the latest Regulation.
In other words, through a Regulation normally used to adjust fuel prices on the market, the government has this time adjusted excise duties.
A legal challenge
As Forbes Serbia has learned from sources close to the government, it was precisely the Law on Trade – and the much-discussed Article 39 – that proved to be the stumbling block delaying a decision to reduce excise duties beyond the statutory 20 per cent. The source describes it as a “legally challenging solution”, though ultimately interpreted as permissible.
The provision states: “To prevent market disruptions or to mitigate the harmful consequences of market disturbances in the supply of goods and services essential to the life and health of people and to the operation of economic entities, institutions and other organisations of general interest, the Government may prescribe temporary measures relating to a specific type of goods and services, a specific category of traders, service providers or consumers, working hours, the need to implement obligations arising from international agreements, prices, as well as other conditions for conducting trade, except for measures relating to the import and export of goods.”
It further stipulates that such temporary measures must be proportionate to the objective and expected outcomes, and may not last longer than six months from the date of their introduction – unless otherwise specified by a special law.
Different interpretations of the law
Lawyers consulted by Forbes Serbia interpret this provision differently. However, they agree on one point: it is so broadly worded that it can be interpreted as allowing the adjustment of excise duties in cases of market disruption – but it can just as easily be interpreted as not allowing it, and as being in conflict with legislation specifically governing excise duties.
In addition to legal concerns, there were also calculations regarding the impact such a reduction would have on public finances and the budget. Estimates suggest that the reduction would result in a monthly shortfall in excise revenue of around €40 million – equating to an annual loss of just over €900 million, or roughly one per cent of Serbia’s GDP.
However, since such a measure is not expected to remain in force for a full year, and it is increasingly clear that excise duties will not be reduced by 60 per cent, the budgetary shortfall would not be as problematic. Sources therefore dismiss this factor as the main reason why excise duties were not reduced as Vučić had announced.
This is despite the fact that an IMF mission will soon arrive in Belgrade, with excise duties certain to be one of the topics discussed – particularly in the context of public finance sustainability and the agreed budget deficit.
Vučić’s pre-election misrepresentation
The fact remains that Aleksandar Vučić did not tell the truth when he announced on 20 March a 60 per cent reduction in excise duties. Sources familiar with the situation believe that this was never the actual plan, interpreting the announced percentage as another promise to voters ahead of elections in 10 municipalities held just nine days later.
In other words, reducing excise duties by more than half was never part of the plan. The adjustment that took place last week was – but the President and officials in the Ministry of Finance then encountered potential legal obstacles, which delayed even the additional five-percentage-point reduction.
As a result, the decision was only adopted around 20 days after Vučić had announced that the excise duties would be adjusted immediately.
(Forbes Serbia, 20.04.2026)