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Delayed Payments of Taxes – New Government Regulation Due to COVID-19

Delayed Payments of Taxes – New Government Regulation Due to COVID-19

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During the course of last year and with the aim to mitigate the expected difficult economic situation in Serbia caused by COVID – 19 pandemic, the Government of the Republic of Serbia (the “Government”) issued two by-laws – Regulation on Fiscal Reliefs and Direct Payments to Commercial Subjects in Private Sector and Pecuniary Aid to the Citizens in order to Mitigate the Economic Consequences caused by COVID – 19  and accompanying Conclusion of the Government (jointly referred to as the “Relief Regulations”), providing economic aid to the private commercial sector in the form of fiscal reliefs and direct payments.

Also, the Government issued the new Regulation on Procedure and Method for Delaying the Payment of Owed Taxes and Contributions in order to Mitigate Economic Consequences caused by COVID – 19  (the “Regulation on Delayed Payments”), defining how are the delayed payments of taxes and contributions going to be repaid by the entities which opted to use this right in accordance with Relief Regulations.

The deadlines for repayment of delayed taxes and contributions prescribed under the Regulation on Delayed Payments are different from the general deadlines for payment of appropriate taxes and contributions – the same is to be repaid in 24 equal monthly installments, starting from 10th February 2021, i.e. in regard to capital gain tax and/or tax for self-employment income, starting from 10th of the month following the month in which the appropriate final tax application is submitted.

Having in mind that the deadlines for repayment are, in fact, additional deadlines for payment of subject taxes and contributions, the delay with payment of any installment would result in loss of the right to use delayed payment benefits. This means that companies and entrepreneurs that would fail to settle any of the installments on time would definitely lose the right to repay delayed taxes and contributions through installments and, all of the unpaid amounts that were initially delayed would become due on the day when the subject at hand lost this right.

On the other hand, the entities which opted to use the right to delayed payment are not obliged to repay the owed amounts of taxes and contributions through 24 installments, i.e. they are free to repay the owed amounts at any earlier date, provided that the same are repaid in full.

The Regulation on Delayed Payments further prescribes other conditions for delayed payment through (24) installments, such as:

  • what are the minimum amounts of installments (separately for taxes and contributions for salaries, salary compensations, and personal salaries; for capital gain tax; and of taxes and contributions for self-employment income);
  • what conditions do commercial subjects have to fulfill in order to exercise their right to delayed payment of capital gain tax through installments, i.e. delayed payment of taxes and contributions for self-employment income, and that is to submit the appropriate final tax application within prescribed deadlines;
  • who is considered the taxpayer of delayed taxes and contributions in case of status changes, or initiated bankruptcy or liquidation proceedings; and other.

By Nikola Djordjevic, Partner, and Marija Vukcevic, Senior Associate, JPM Jankovic Popovic Mitic

Serbia Knowledge Partner

The oldest full service commercial law firm in Serbia, founded in 1991, JPM with three decades of experience in assisting local and international businesses presence and growth not only in Serbia but throughout the SEE region.

We have accumulated a wealth of knowledge in every industrial and corporate sector, from energy to banking, transport, manufacturing and telecommunications, while remaining true to a pioneering spirit that has always drawn us to follow the latest trends and developments in providing of our services to clients. Today we use the latest legal tech available in serving our clients and are expanding our services to clients from growing industries such as renewable energy, IT and life sciences, by offering innovative solutions and a pro-active approach to broaching new grounds.

Our expertise, experience, and commitment to professional excellence mean we are routinely involved in landmark cases and transactions, while our high standing among clients and peers sees us ranked among the leading law firms by independent guides such as Chambers & Partners, Legal 500, and IFLR1000.

We are known for working closely with clients and treating their problems as our own. Our lawyers pride themselves on being team players, fast and available, specialised in terms of practice area and industry, but versatile and creative in their thinking. We believe our advice should be tailor-made and that even the thorniest issue has a legal solution.

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