Serbia Tax Guide

2011

Foreword

foreword For any business moving into new markets, a key deciding factor will be the target country’s tax regime. What is the corporate tax rate? Are there any incentives for overseas businesses? Are there double tax treaties in place? How will foreign source income be taxed? Since 1994, the PKF network of independent member firms, administered by PKF International Limited, has produced the PKF Worldwide Tax Guide (WWTG) to provide international businesses with the answers to these key tax questions. This handy reference guide provides clients and professional practitioners with comprehensive tax and business information for 100 countries throughout the world. As you will appreciate, the production of the WWTG is a huge team effort and I would like to thank all the member firms of the PKF network who gave up their time to contribute the vital information on their country’s taxes that forms the heart of this publication. I would also like thank Richard Jones, PKF (UK) LLP, Kevin Reilly, PKF Witt Mares, and Rachel Yeo, PKF Melbourne for co-ordinating and checking the entries from within their regions. The WWTG continues to expand reflecting both the growth of the PKF network and the strength of the tax capability offered by member firms throughout the world. I hope that you find that the combination of reference to the WWTG plus assistance from your local PKF member firm will provide you with the advice you need to make the right decisions for your international business. Jon Hills PKF (UK) LLP Chairman, International Tax Committee of the PKF International network

PKF Worldwide Tax Guide 2011

I

important disclaimer This publication should not be regarded as offering a complete explanation of the taxation matters that are contained within this publication. Disclaimer

This publication has been sold or distributed on the express terms and understanding that the publishers and the authors are not responsible for the results of any actions which are undertaken on the basis of the information which is contained within this publication, nor for any error in, or omission from, this publication. The publishers and the authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication. Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances. PKF International is a network of legally independent member firms administered by PKF International Limited (PKFI). Neither PKFI nor the member firms of the network generally accept any responsibility or liability for the actions or inactions on the part of any individual member firm or firms.

II

PKF Worldwide Tax Guide 2011

preface

On a country-by-country basis, each summary addresses the major taxes applicable to business; how taxable income is determined; sundry other related taxation and business issues; and the country’s personal tax regime. The final section of each country summary sets out the Double Tax Treaty and Non-Treaty rates of tax withholding relating to the payment of dividends, interest, royalties and other related payments. While the WWTG should not to be regarded as offering a complete explanation of the taxation issues in each country, we hope readers will use the publication as their first point of reference and then use the services of their local PKF member firm to provide specific information and advice. In addition to the printed version of the WWTG, individual country taxation guides are available in PDF format which can be downloaded from the PKF website at www.pkf.com Finally, PKF International Limited gladly welcomes any comments or thoughts readers may wish to make in order to improve this publication for their needs. Please contact Kevin F Reilly, PKF Witt Mares, 10304 Eaton Place, Suite 440, Fairfax, Virginia 22030, USA by email to [email protected] PKF INTERNATIONAL LIMITED MARCH 2011 ©PKF INTERNATIONAL LIMITED ALL RIGHTS RESERVED USE APPROVED WITH ATTRIBUTION

PKF Worldwide Tax Guide 2011

III

Preface

The PKF Worldwide Tax Guide 2011 (WWTG) has been prepared to provide an overview of the taxation and business regulation regimes of 100 of the world’s most significant trading countries. In compiling this publication, member firms of the PKF network have sought to base their summaries on information current as of 30 September 2010, while also noting imminent changes where necessary.

about pKf international limited PKF International Limited (PKFI) administers a network of legally independent firms. The PKF network is the 10th largest global accountancy network with over 245 legally independent member and correspondent firms which have a combined annual turnover of $2.4 billion. Located in 125 countries, the member firms of the PKF network share a commitment to providing clients with high quality, partner-led services tailored to meet each client’s own specific requirements. The membership base of the PKF network has grown steadily since it was formed in 1969. Added to the sustained growth in the number of PKF member firms, this solidity has provided the foundations for the global sharing of expertise, experience and skills and the development of services that meet the evolving needs of all types of client, from the individual to the multi-national corporation. Services provided by member firms include: Introduction

Assurance & Advisory Insolvency – Corporate & Personal Financial Planning Taxation Corporate Finance Forensic Accounting Management Consultancy Hotel Consultancy IT Consultancy PKF member firms are organised into five geographical regions covering Africa; Latin America; Asia Pacific; Europe, the Middle East & India (EMEI); and North America & the Caribbean. Each region elects representatives to the board of PKF International Limited, which administers the network. While the member firms remain separate and independent, international tax, corporate finance, professional standards, audit, hotel consultancy and business development committees also work together to improve quality standards, develop initiatives and share knowledge across the network. Please visit www.pkf.com for more information.

IV

PKF Worldwide Tax Guide 2011

structure of country descriptions a. taXes payable FEDERAL TAXES AND LEVIES COMPANY TAX CAPITAL GAINS TAX BRANCH PROFITS TAX SALES TAX/VALUE ADDED TAX FRINGE BENEFITS TAX LOCAL TAXES OTHER TAXES b. determination of taXable income

Structure

CAPITAL ALLOWANCES DEPRECIATION STOCK/INVENTORY CAPITAL GAINS AND LOSSES DIVIDENDS INTEREST DEDUCTIONS LOSSES FOREIGN SOURCED INCOME INCENTIVES c. foreiGn taX relief d. corporate Groups e. related party transactions f.

witHHoldinG taX

G. eXcHanGe control H. personal taX i.

treaty and non-treaty witHHoldinG taX rates

PKF Worldwide Tax Guide 2011

V

international time Zones AT 12 NOON, GREENwICH MEAN TIME, THE STANDARD TIME ELSEwHERE IS: A Algeria . . . . . . . . . . . . . . . . . 12 noon Angola . . . . . . . . . . . . . . . . . . . .1 pm Argentina . . . . . . . . . . . . . . . . . . 9 am Australia Melbourne . . . . . . . . . . . . .10 pm Sydney . . . . . . . . . . . . . . .10 pm Adelaide . . . . . . . . . . . . 9.30 pm Perth . . . . . . . . . . . . . . . . . .8 pm Austria . . . . . . . . . . . . . . . . . . . .1 pm B Bahamas . . . . . . . . . . . . . . . . . . . 7 am Bahrain . . . . . . . . . . . . . . . . . . . .3 pm Belgium. . . . . . . . . . . . . . . . . . . .1 pm Belize . . . . . . . . . . . . . . . . . . . . . 6 am Bermuda . . . . . . . . . . . . . . . . . . . 8 am Brazil. . . . . . . . . . . . . . . . . . . . . . 7 am British Virgin Islands . . . . . . . . . . . 7 am Time Zones

C Canada Toronto . . . . . . . . . . . . . . . . 7 am Winnipeg . . . . . . . . . . . . . . . 6 am Calgary . . . . . . . . . . . . . . . . 5 am Vancouver . . . . . . . . . . . . . . 4 am Cayman Islands . . . . . . . . . . . . . . 7 am Chile . . . . . . . . . . . . . . . . . . . . . . 8 am China - Beijing . . . . . . . . . . . . . .10 pm Colombia . . . . . . . . . . . . . . . . . . . 7 am Croatia . . . . . . . . . . . . . . . . . . . .1 pm Cyprus . . . . . . . . . . . . . . . . . . . .2 pm Czech Republic . . . . . . . . . . . . . .1 pm D Denmark . . . . . . . . . . . . . . . . . . .1 pm Dominican Republic . . . . . . . . . . . 7 am E Ecuador. . . . . . . . . . . . . . . . . . . . 7 am Egypt . . . . . . . . . . . . . . . . . . . . .2 pm El Salvador . . . . . . . . . . . . . . . . . 6 am Estonia . . . . . . . . . . . . . . . . . . . .2 pm F Fiji . . . . . . . . . . . . . . . . .12 midnight Finland . . . . . . . . . . . . . . . . . . . .2 pm France. . . . . . . . . . . . . . . . . . . . .1 pm G Gambia (The) . . . . . . . . . . . . . 12 noon Germany . . . . . . . . . . . . . . . . . . .1 pm Ghana . . . . . . . . . . . . . . . . . . 12 noon Greece . . . . . . . . . . . . . . . . . . . .2 pm Grenada . . . . . . . . . . . . . . . . . . . 8 am Guatemala . . . . . . . . . . . . . . . . . . 6 am Guernsey . . . . . . . . . . . . . . . . 12 noon Guyana . . . . . . . . . . . . . . . . . . . . 8 am H Hong Kong . . . . . . . . . . . . . . . . .8 pm Hungary . . . . . . . . . . . . . . . . . . .1 pm I India . . . . . . . . . . . . . . . . . . . 5.30 pm Indonesia. . . . . . . . . . . . . . . . . . .7 pm Ireland. . . . . . . . . . . . . . . . . . 12 noon

VI

Isle of Man . . . . . . . . . . . . . . 12 noon Italy . . . . . . . . . . . . . . . . . . . . . .1 pm J Jamaica . . . . . . . . . . . . . . . . . . . 7 am Japan . . . . . . . . . . . . . . . . . . . . .9 pm Jersey . . . . . . . . . . . . . . . . . . 12 noon Jordan . . . . . . . . . . . . . . . . . . . .2 pm K Kazakhstan . . . . . . . . . . . . . . . . .5 pm Kenya . . . . . . . . . . . . . . . . . . . . .3 pm Korea . . . . . . . . . . . . . . . . . . . . .9 pm Kuwait . . . . . . . . . . . . . . . . . . . . .3 pm L Latvia . . . . . . . . . . . . . . . . . . . . .2 pm Lebanon . . . . . . . . . . . . . . . . . . .2 pm Liberia . . . . . . . . . . . . . . . . . . 12 noon Libya . . . . . . . . . . . . . . . . . . . . . .2 pm Luxembourg . . . . . . . . . . . . . . . .1 pm M Malaysia . . . . . . . . . . . . . . . . . . .8 pm Malta . . . . . . . . . . . . . . . . . . . . .1 pm Mauritius . . . . . . . . . . . . . . . . . . .4 pm Mexico . . . . . . . . . . . . . . . . . . . . 6 am Morocco . . . . . . . . . . . . . . . . 12 noon N Namibia. . . . . . . . . . . . . . . . . . . .2 pm Netherlands (The). . . . . . . . . . . . .1 pm New Zealand . . . . . . . . . . .12 midnight Nigeria . . . . . . . . . . . . . . . . . . . .1 pm Norway . . . . . . . . . . . . . . . . . . . .1 pm O Oman . . . . . . . . . . . . . . . . . . . . .4 pm P Panama. . . . . . . . . . . . . . . . . . . . 7 am Papua New Guinea. . . . . . . . . . .10 pm Philippines . . . . . . . . . . . . . . . . . .8 pm Poland. . . . . . . . . . . . . . . . . . . . .1 pm Portugal . . . . . . . . . . . . . . . . . . .1 pm Puerto Rico . . . . . . . . . . . . . . . . . 8 am Q Qatar. . . . . . . . . . . . . . . . . . . . . . 8 am R Romania . . . . . . . . . . . . . . . . . . .2 pm Russia Moscow/St Petersburg . . . . .3 pm S Serbia . . . . . . . . . . . . . . . . . . . . .1 pm Sierra Leone . . . . . . . . . . . . . 12 noon Singapore . . . . . . . . . . . . . . . . . .7 pm Slovak Republic . . . . . . . . . . . . . .1 pm Slovenia . . . . . . . . . . . . . . . . . . .1 pm South Africa . . . . . . . . . . . . . . . . .2 pm Spain . . . . . . . . . . . . . . . . . . . . .1 pm Sweden . . . . . . . . . . . . . . . . . . . .1 pm Switzerland . . . . . . . . . . . . . . . . .1 pm

PKF Worldwide Tax Guide 2011

T Taiwan . . . . . . . . . . . . . . . . . . . .8 pm Thailand . . . . . . . . . . . . . . . . . . .7 pm Tunisia . . . . . . . . . . . . . . . . . 12 noon Turkey . . . . . . . . . . . . . . . . . . . . .2 pm Turks and Caicos Islands . . . . . . . 7 am U Uganda . . . . . . . . . . . . . . . . . . . .2 pm United Arab Emirates . . . . . . . . . .4 pm United Kingdom . . . . . . .(GMT) 12 noon United States of America New York City. . . . . . . . . . . . 7 am Washington, D.C. . . . . . . . . . 7 am Chicago . . . . . . . . . . . . . . . . 6 am Houston. . . . . . . . . . . . . . . . 6 am Denver . . . . . . . . . . . . . . . . 5 am Los Angeles . . . . . . . . . . . . . 4 am San Francisco . . . . . . . . . . . 4 am Uruguay . . . . . . . . . . . . . . . . . . . 9 am

Time Zones

V Venezuela . . . . . . . . . . . . . . . . . . 8 am Vietnam. . . . . . . . . . . . . . . . . . . .7 pm

PKF Worldwide Tax Guide 2011

VII

Serbia

serbia Currency: Dinar (RSD) Member Firm: City: Belgrade

Dial Code To: 381

Dial Code Out: 00

Name: Petar Grubor

Contact Information: 30 18 445 [email protected]

a. taXes payable FEDERAL TAxES AND LEVIES CORPORATE INCOME TAx Corporate income tax is payable by the following persons: 1. A legal entity is considered as resident in Serbia if it is established or has its place of effective management and control in the territory of the Republic. Residents are taxed on their income generated in the territory of the Republic, as well as on worldwide income. 2. Non-residents are taxed only on their income sourced through a permanent establishment in Serbia. A permanent establishment is any permanent place of business through which a non-resident conducts his business. A taxable entity includes a company registered as a joint stock company, a limited liability company, a general partnership, limited partnership, a socially owned company or a public enterprise, as well as a co-operative or any other legal entity generating income from the sale of goods or rendering services to the market. The tax year is the same as the calendar year, although a different tax year may be used if approved by the tax authorities. A tax period may not exceed 12 months in length and may only be changed once every five years. Tax returns must be filed with the tax authorities within two months and ten days of the end of the tax year. A monthly instalment payment system applies based on the profits arising in the previous period. The tax rate on all profits and gains is 10%. VALUE ADDED TAx (VAT) According to Law on VAT, taxpayer is an entity that independently trades in goods and services as a producer, trader or provider of services for the purpose of profit. The VAT rules also apply to the following: 1. agents assigned by foreign entities doing business in Serbia but without a permanent business unit in Serbia 2. foreign recipients of goods and services from a Serbian enterprise 3. entities that account for VAT in their invoices but are not obliged to pay the tax according to the Law on VAT 4. entities that import goods. Taxpayers whose total turnover did not exceed RSD 4,000 in the preceding calendar year are exempt from VAT. Taxpayers whose total turnover was between RSD 2,000 and RSD 4,000 in the preceding year may choose to register. The taxable amount for domestic goods and services is the sales price, including excise and duty costs and all secondary expenses charged to the recipient of the goods and services. The standard rate is 18%. A reduced rate of 8% applies to certain hospitality-related and other goods and services. A 0% rate applies to certain transportation, medical and educational services,and technical, medical and other goods. ExCISE DUTIES Special excise duties apply to the following: • mineral oils • alcohol • tobacco products • coffee. REAL ESTATE TRANSFER TAx This is payable by the person or entity acquiring the real estate. The tax rate is 2.5%. The tax base is the market value of the real estate on the date of acquisition except in some particular circumstances. LOCAL TAxES PROPERTy TAx Property tax is payable in Serbia by all legal entities and individuals who own or have rights over real estate located in the Republic of Serbia such as: • rights to usufruct • right to use and inhabit PKF Worldwide Tax Guide 2011

1

Serbia

• • •

time-sharing right tenancy right of one year or for indefinite period of time, and urban usage right (municipal, public and other state-owned land) exceeding 1,000 square meters in area.

If the legal owner of the real estate is not known or cannot be determined, the property tax is levied on the person with beneficial ownership of the property (eg a tenant). Where the taxpayer keeps books, the property tax on real estate is levied at a flat rate of 0.40%. If the taxpayer is an individual or entrepreneur who is taxed on the so-called lump-sum income basis, the rates of property tax on real estate are progressive, as shown in the following table: Taxable base

Tax due

In RSD

Approx EUR

In RSD

EUR

Up to 6 million

Up to 60,000

0.40%

0.40%

6 million – 15 million

60,000 – 150,000

24,000 + 0.80% on the amount exceeding 6 million

290 + 0.80% on the amount exceeding 60,000

15 million – 30 million

150,000 – 300,000

96,000 + 1.50% on the amount exceeding 15 million

1,200 + 1.50% on the amount exceeding 150,000

Over 30 million

Over 300,000

321,000 + 3% on the amount exceeding 30 million

3,900 + 3% on the amount exceeding 300,000

A taxpayer does not pay property tax relating to the ownership of real estate with a total value not exceeding RSD 400,000 (approximately EUR 4,000). Property tax is assessed on the basis of the facts reported in the tax return in the first taxable year applicable to that property. In subsequent years, the tax return should only be submitted if the facts relevant to the liability have changed. Property tax is paid quarterly within 45 days from the beginning of the three month period. TRADE NAME TAx This is payable by individuals and legal entities which are liable to pay corporate income tax or personal income tax and are registered for the performance of a business activity. TAx ON THE USE OF PUBLIC LAND This is payable by individuals and legal entities that make use of public land. The amount of the tax is prescribed by the individual commune or city. b. determination of taXable income Taxable profits are those calculated under the accounting regulations, adjusted in accordance with the provisions of the Corporate Income Tax Law. OPERATIONAL ExPENSES Significant adjustments include: 1. Expenses which are not recognised as expenses for corporate income tax purposes include: • expenses which cannot be documented • bad debt provisions, • gift and contributions to political organizations • gifts and other advertising expenditures that are not documented or if the recipient is an associated entity • share of the profit paid to employees or other individuals • expenses incurred other than for the purpose of conducting business activities • impairment of assets, except in the case of damage resulting from force majeure • calculated and unpaid redundancy remuneration due to employees on the basis of retirement or termination of employment on other grounds. Expenditure recognised for corporate income tax purposes up to certain amounts including: • depreciation computed in accordance with tax depreciation rules • bad debt provisions, write-off of receivables and general provisions • expenses for health care, scientific, educational, humanitarian, religious, ecological and sport-related purposes are tax-deductible up to 3.5% of total revenue • expenses for cultural purposes are tax-deductible up to 3.5% of total revenue • membership fees paid to chambers of commerce and other associations (except political parties) are deductible up to 0.1 % of gross receipts, • advertising and promotional expenses are tax deductible up to 5% of total revenue • business entertainment expenses are tax deductible up to 0.5% of total revenue.

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PKF Worldwide Tax Guide 2011

Serbia

FIxED ASSETS According to the Corporate Income Tax Law, fixed assets are tangible and intangible assets of which the service life is longer than a year and the individual acquisition price at the time of acquisition was higher than the average gross wage per employee in the Republic, according to the latest data published by the statistics authority of the Republic. Fixed assets are divided into five groups with depreciation rates prescribed for each as follows: Asset (Group)

Rate (%)

Buildings (I)

2.5

Machinery, equipment and other assets (II to V)

10/15/20/30

Intangible assets (V)

10

FIxED ASSETS A straight-line depreciation method is prescribed for the first group. A declining balance method is prescribed for assets in other groups. Detailed regulation of the division of fixed assets into groups, and the method of determining depreciation, is prescribed under special by-laws issued by the Ministry of Finance. VALUATION OF INVENTORy Cost of materials and the purchase value of merchandise are tax deductible up to the amount calculated by applying the average weighted cost method or FIFO method. If another method is used, an adjustment for tax purposes should be made. RESERVES AND PROVISIONS Provisions for bad and doubtful debts are tax deductible if at least 60 days have expired from the due date. A provision has to be made individually for each debt. A write-off of an individual debt, (except for those from debtors which are also creditors) is recognised as an expense under the following conditions: • related revenue has already been accrued, • the debt has been written off as uncollectible, • evidence of the failure to collect the debts through a court order is available. Long-term provisions are recognised for tax purposes if they are made for the renewal of natural resources, warranty period costs and retained caution money and deposits. CAPITAL GAINS AND LOSSES Gains from the sale of capital assets are included in a company’s taxable income and taxed at the same rate as other profits. Capital losses may be set-off against capital gains in the year they arose. Capital losses may be carried forward for five years but may not be carried back. DIVIDENDS Dividends and other income that constitutes a share in the profit of resident companies is not included in the tax base if received from resident companies. INTEREST DEDUCTIONS Interest payable is generally tax deductible except for interest payable on taxes, contributions and other public charges, fines and penalties. However, rules restrict deductions for interest on any loan owed to related parties if the loan is more than four times the net asset value of the company. LOSSES Ordinary losses may be carried forward for five years but may not be carried back. FOREIGN-SOURCED INCOME Serbian resident companies are subject to tax on their worldwide income. Gross foreign dividends from non-resident companies (including corporate tax income and withholding tax) are included in taxable income. Tax credits are available for corporate income tax and withholding taxes suffered on the dividends overseas but relief is restricted to the corporate income tax payable in Serbia on the dividends. INCENTIVES A taxpayer who invests in property, building and equipment or natural assets is entitled to a tax credit equal to 20% of the investment value, which can reduce the income tax obligation by up to 50% for the year in which investment was made. Exceptionally, small entities are entitled to a tax credit of 40% of the investment which can extinguish up to 70% of the income tax obligation for the year in which investment was made. Unused tax credits can be carried forward for up to ten years. PKF Worldwide Tax Guide 2011

3

Serbia

Exceptionally a taxpayer is entitled to a tax credit of up to 80% of the value of investment in property, building and equipment or natural assets if the investment was made in one of the following businesses: agriculture, fishing, production of textile yarns and fabrics, clothes manufacture, finishing and fur colouring, production of leather products, basic metals, production or standard metal products, machine and device production, office and calculating equipment production, electric machines and devices production, radio, TV and communication equipment production, medical, optical and precision equipment production, motor vehicles production, trailers and semi trailers, production of other transport facilities, recycling, cinematographic and video production. A taxpayer who invests at least RSD 800,000,000 in fixed assets and additionally employs at least 100 employees is entitled to tax relief for the next ten years in respect of the invested asset. Every non-profit organisation with excess income up to RSD 400,000 is tax exempt if it fulfills several conditions. Every person who sets up a company in Serbia is entitled to income tax relief for five years from the date of the investment. A taxpayer who has founded a business in an undeveloped region is entitled to an income tax deduction for the next two years based on the contribution that the business unit makes to the entity’s profits. A taxpayer who operates in an undeveloped region is entitled to tax relief over the next five years if he fulfils several conditions. c. foreiGn taX relief Double tax relief is available under the provisions of various double tax agreements with other territories. Unilateral relief is available in other cases by means of a credit for overseas taxes against the Serbian tax payable on the same income. d. corporate Groups Parent and subsidiary companies are recognised as a group for tax consolidation purposes if the parent has direct or indirect control at least 75% of the subsidiary’s share capital. All members of the group must be resident companies. Once approved, tax consolidation must be applied for the next five years. e. related party transactions The Serbian tax authorities require arm’s length pricing to be applied for tax purposes in respect of transactions entered into by Serbian companies with related companies. The comparable uncontrolled price method, the cost-plus method and the resale price method are all accepted methods for establishing an appropriate arm’s length price. f.

witHHoldinG taX

A 20% withholding tax is applicable to various forms of payment to non-residents including: • Interest • Dividends • Royalties • Rental fees • Capital gains and • Certain service fees. G. eXcHanGe control There are no exchange controls in Serbia. H. personal taX INCOME TAx Income tax is chargeable on all Serbian residents in respect of income generated in Serbia and other countries. A Resident of the Republic of Serbia (hereinafter referred as “resident”) is each person who: 1. has a personal residence or his centre of interests in Serbia 2. resides in Serbia for at least 183 days, whether or not consecutively, within a period of 12 months beginning or ending in the respective taxation year. Serbian residents are taxed on their worldwide income including: • income from wages (tax rate – 12 %) • income from agricultural activity and forestry (tax rate – 10 %)

4

PKF Worldwide Tax Guide 2011

Serbia

• • • • • •

income from independent personal activities (tax rate – 10 %) income from royalties etc.(tax rate – 20 %) income from capital (tax rate – 10 %) income from property and property rights (tax rate – 20 %); capital gains (tax rate – 10 %) and other income (tax rate – 10 or 20 %).

Annual personal tax is paid under a withholding tax system. Tax credits are available for overseas taxes up to the amount of tax suffered in Serbia on the income concerned. INCOME FROM wAGES Income from wages represents earnings based on the full-and part-time employment based on contracts concluded with the employer, or with the Youth Cooperative, until the age of 26. Income from wages is tax chargeable either earned in cash or cash equivalents, shares (except the shares assigned in process of privatization) and similar. The taxable person is the employee, but the employer is responsible for calculating and withholding personal income tax on behalf of its employees. The tax rate is currently 12%. Specified types of income, up to the prescribed amounts, are tax exempt. They include public transportation cost for home to office travel and daily allowances for business trips. In certain cases, non-residents working for diplomatic and consular missions or international organizations in Serbia are not taxable. The following incentives are available: Employers, who hire new employees younger than 30, are exempt from withholding salary tax and social security contributions. Those persons have to be registered as unemployed with the National Employment Service for at least three months prior to commencement of employment. The exemption is applicable for two years from the commencement of employment. This exemption is applicable also to trainees younger than 30 registered as unemployed with the National Employment Service. The relief is applicable for three years from the commencement of employment. The same exemption applies if disabled persons are employed for an indefinite period of time, in accordance with the Law covering prevention of discrimination of disabled persons. This exemption is applicable for three years from the commencement of employment. INCOME FROM wAGES A tax exemption is provided in cases where individuals older than 45 are employed and have registered with the National Employment Service for at least six months prior to employment or have been entitled to unemployment reimbursement. Relief is available for up to 80% of employer social security contributions. This incentive is available for a two year period from the commencement of employment. ANNUAL INCOME TAx Annual income tax is also payable on any amount exceeding three times the annual average wage. Annual income tax is payable based on the following rates: 1. any amount up to six times the average annual salary – 10 % 2. any amount higher than six times the average annual salary – 10 % of six times the average annual salary + 15 % on the amount paid which exceeds six times the average annual salary. i.

treaty and non-treaty witHHoldinG taX rates Dividends (3) (%)

(2) (%)

Interest Royalties (1) (%)

(%)

(%)

Domestic Rates: Companies:

–

20

–

20

20

Individuals:

–

10

–

10

20

5

15

–

10

10

Treaty Rates: Albania

PKF Worldwide Tax Guide 2011

5

Serbia

Dividends

Interest Royalties

(3) (%)

(2) (%)

(1) (%)

(%)

Belarus (4)

5

15

–

8

10

Belgium (4)

10

15

–

15

10

(%)

Bosnia & Herzegovina

5

10

–

10

10

Bulgaria (4)

5

15

–

10

10

China (4)

–

–

5

10

10

Croatia (4)

5

10

–

10

10

Cyprus (4)

–

–

10

10

10

Czech Republic

–

–

10

10

5 or 10

Denmark

5

15

–

0

10

Egypt

5

15

–

15

15

Estonia

5

10

–

10

5 or 10

Finland (4)

5

15

–

0

10

France (4)

5

15

–

0

0

Germany (4)

–

–

15

0

10

Greece

5

15

–

10

10

Hungary (4)

5

15

–

10

10

India

5

15

–

10

10

Ireland

5

10

–

10

5 or 10

Italy (4)

–

–

10

10

10

DPR Korea (4)

–

–

10

10

10

Kuwait (4)

5

10

–

10

10

Latvia

5

10

–

10

5 or 10

Lithuania

5

10

–

10

10

Macedonia (4)

5

15

–

10

10

Malaysia

–

–

10

10

10

Malta

5

10

–

10

5 or 10

Moldova

5

15

–

10

10

Netherlands (4)

5

15

–

0

10

Norway (4)

–

–

15

0

10

Poland (4)

5

15

–

10

10

Romania (4)

–

–

10

10

10

Russia (4)

5

15

–

10

10

Sri Lanka (4)

–

–

12.5

10

10

Slovenia

5

10

–

10

5 or 10

Slovak Republic

5

15

–

10

10

Spain

5

10

–

10

5 or 10

Sweden (4)

5

15

–

0

0

Switzerland

5

15

–

10

0 or 10

Turkey

5

15

–

10

10

Ukraine (4)

5

10

–

10

10

United Kingdom (4)

5

15

–

10

10

1. 2. 3. 4.

6

Standard tax rate. Rates applicable - at least 25% of share capital or voting power, as applicable, is held by the recipient in the payer. Rates applicable - less than 25% of share capital or voting power, as applicable, is held by the recipient in the payer. Based on the treaty concluded by the former Socialist Federal Republic of Yugoslovia or the Federal Republic of Yugoslavia. PKF Worldwide Tax Guide 2011

$100

www.pkf.com