Changes in Capital Market and Tax Legislation

UniCredit Bank Serbia JSC
Summary: 
The Serbian Parliament adopted changes to the legislation on capital markets and tax
Fri, 08/01/2016

Amendments to the Tax Procedure and Tax Administration Law expand the obligation for filing tax returns to liquidation or bankruptcy administrators, who are obliged to file tax returns in accordance with tax the regulations for the period starting from the date of opening the liquidation or bankruptcy procedure.

The penalty for a legal person who untimely files a tax return and does not pay the tax within the prescribed deadline is reduced from RSD 150,000 to RSD 100,000. In addition to the penalties applied to the legal entity (taxpayer), in case of tax violations fines ranging from RSD 10,000 to RSD 100,000 are also prescribed for the responsible individuals in the legal entity.

The deadline for switching to electronic filing of tax returns for taxes payable per tax resolution (i.e. capital gains tax) has been extended to 1 March 2016.

The changes to Tax Procedure and Tax Administration Law are effective as of 1 January 2016.

 

A new provision was introduced in Article 40 of the Corporate Profit Tax Law, according to which withholding tax shall be charged and paid at the rate of 20% (unless otherwise provided by an international agreement on the avoidance of double taxation) on payments to non-resident legal entities related to services which are provided or used, or are to be provided or are to be used on the territory of Republic of Serbia (by local legal entities). The respective resident legal entity shall submit the tax return on the day when the payment for such services, provided by a non-resident legal entity, has been made.

The application of the changes to this article commences on 1 March 2016.

 

Amendments to the Personal Income Tax Law introduce the notion of income from immovable property, which previously was considered income from capital.

The change in respect of the taxation of income from immovable property becomes effective as of 1 January 2017.  

 

Changes to the Capital Market Law extend the list of international and supranational institutions which, by law, are recognized as issuers. When issuing debt securities, such institutions are considered as non-public companies and certain exemptions are applied to them in case of public offering or admission to trading of securities on a regulated market or MTF within Republic of Serbia. In addition to IMF, ECB and EIB, that have already been part of this list, it now includes also EBRD, IBRD, IFC and other members of the World Bank Group.

The changes to the Capital Market Law are effective as of 7 January 2016.

 

Impact on investors: The changes in the tax regulations affect the activities of foreign investors in the market and their obligations to properly meet tax obligations. The changes in the capital market legislation relate primarily to recognised international organisation acting as issuers of securities in Serbia and may impact the way foreign investors trade these securities.