Through various channels UniCredit is lobbying for unified market practice in Serbia. By Dragana Stijelja, Corporate Actions and Tax Specialist, Serbia
UniCredit Bank, as a member of several lobbying groups such as the Serbian Banking Association Tax Committee, the Committee for Developing of Financial Markets and the Compliance Committee, uses these associations to push for unified procedures at all local tax authorities and for a reduction of deadlines for responding to tax reclaims. Up until now we have experienced that some reclaims took more than a year.
Here are some examples for hardships that market participants are confronted with:
The withholding tax regime poses a number of problems for issuers. Applied at source regarding cash dividend and interest (or coupon) payment, the tax is accrued and paid by the income payer. In that case each tax reclaim has to be initiated by the issuer. Issuers, however, are not willing to start a tax reclaim procedure especially in cases when the client was late in providing a Certificate of Residency. In the eyes of the issuers, the client is in charge of delivering the correct information in time and should be held responsible for any shortcoming.
In case the issuer submitted a miscalculated tax application, they would compensate the client. This usually happens rather by refunding the client from the company’s reserved funds, not by submitting an amended tax application.
CGT is not withheld at source and all sale proceeds have to be reported to the local tax authority within 30 calendar days from the settlement date via the local tax representative. Tax reclaim is possible but only before the final tax bill is issued.
Tax reclaims based on miscalculated withholding tax or capital gains tax do not have a prescribed market procedure and are dealt with on a case by case basis. In the case of withholding tax (interest and dividend payment), the tax reclaim process has to be initiated by the income payer and in the case of CGT, tax reclaim has to be initiated by the client (investor) via their local tax representative.