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