Compensation of 60% to 120% of the minimum wage for two more months, deferral of payment of taxes and contributions for another month
In order to mitigate the economic consequences caused by COVID-19, the Government of the Republic of Serbia (“Government”) adopted a Conclusion 05 no. 401-6052/2020 on 30 July 2020 regarding direct payments (“Grants”) and fiscal benefits to the private sector, which refers to the second package of financial aid for the economy (Conclusion1).
The Serbian Government basically extended the package of measures to the Serbian economy due to the Covid-19 pandemic initiated under the Decree on Fiscal Facilities and Direct Grants to Private Business Entities and Financial Aid to Citizens Aimed to Alleviate the Economic Impact of the COVID-19 Pandemic, dated 10 April 2020 (Decree2).
The Conclusion, in its 14 points, mostly relies on the Decree. As defined under point 11 of the Conclusion, the rights to the Grants from the budget of the Republic of Serbia (“RoS“) and to the postponement of payment of taxes and contributions, the loss of rights and manner of use and disbursement of funds obtained on the basis of Grants from the budget of RoS to the employees, as stipulated in the Decree, shall apply according to the Conclusion.
It is noticeable that the Conclusion kept the differentiation of the rules applicable for SMEs and entrepreneurs on the one hand and for large business entities3 on the other. As a novelty, however, it also distinguishes business entities who have already used the aid from the new business entities which have been established or have acquired the status of VAT payers from March 16 to 20 July 2020 (“New business entities”).
As was the case with the Decree, in order to use the aid business entities have the obligation not to reduce the number of employees by more than 10% within three months from the payment of the last received Grants. The Conclusion, however, clearly stipulates that the employees with a fixed-term employment relationship concluded before 15 March 2020, whose employment agreement expires in the concerned period shall not be considered as part of these 10% of employees.
The Conclusion also prescribes two types of financial aid – additional grants to employers, and tax postponement.
a) Additional grants to employers
In principle, all private sector business entities could benefit from additional Grants, but the Conclusion sets forth the different conditions regarding Grants payment, depending on the type of business entities. In that respect, the Government differentiates the following:
- Business entities in the private sector4, except for business entities that are classified as large business entities that have exercised the right to Grants from the budget of the RoS, and benefited from Grants which are due in July 2020;
- Large business entities, classified as such within the financial reports for 2018, which benefited from Grants from the budget of the RoS and have not lost that right;
- Business entities that do not belong to the groups referred in points 1 and 2, which meet the conditions for receiving Grants from the budget of the RoS in accordance with the Decree, including New businesses entities;
- Newly established entrepreneurs and entrepreneurs who do not submit the PPP-PD Form.
The distinction between the above-mentioned types of business entities is significant in terms of exercising the right to Grants. For example, SMEs which have exercised the right to direct payments in accordance with the Decree are entitled to two monthly Grants in the amount of 60% of direct payments paid to them in July 2020. Large business entities are entitled to Grants in the amount of 50% of the minimum wage (RSD 15,183.52) multiplied with the number of employees, provided they submit the SL Form for June and July 2020 by 15 August 2020. Business entities described in point 3 are entitled to Grants in the amount of 120% of the minimum wage paid in March 2020, i.e. RSD 36,440.45, per employee, provided they submit the PPD-PD Form for August 2020 by 15 September 2020. Last but not least, newly established entrepreneurs and entrepreneurs who do not submit the PPP-PD Form are also entitled to Grants in the amount of 120% of the minimum wage, i.e. RSD 36,440.45.
The Conclusion meticulously stipulates the methods of payments of contribution, the special status of paid funds, and regulates the time limit for using the transferred funds. In that respect, as was the case with the Decree, the Conclusion stipulates that additional direct payments will be made to the employers’ special bank account – COVID-19, the one already created for the first wave of the Government’s financial aid program. This bank account shall be used only for payments of salaries and compensation of salaries to employees. These funds remain exempt from enforcement.
Business entities that have not previously used the Government’s financial aid shall have the bank accounts set up in order to receive the payments.
Business entities are obliged to use the received funds by 31 October 2020, at the latest. If not used, the funds shall be transferred back to the budget of the Republic of Serbia.
b) Fiscal benefits – delaying the maturity of certain public revenues
The measures regarding fiscal benefits include the right to postponement of:
- Payroll taxes and contributions, and salary compensation;
- Taxes and contributions on personal earnings of entrepreneurs;
- Taxes and contributions on income from self-employment.
But, unlike the Decree, the Conclusion does not prescribe the possibility of additional postponement of the advance payment of income tax.
Postponement of payment of public obligations due for payment in August 2020/September 2020
Business entities referred to in points 1 and 2 above are entitled to the postponement of payment of taxes and contributions on salaries, salary compensations, and personal earnings which are due for payment in August, until 5 January 2021.
The precondition to exercise such right is to submit the PPP-PD Form for the accounting period August 2020 in which the field 1.4 – date of payment features 5 January 2021.
Advance payment of taxes and contributions to the income from independent activities of the flat-rate entrepreneur (who has exercised the right to direct payments from the budget of the Republic of Serbia), which is due for payment in August 2020 is postponed until 5 January 2021.
Advance payment of taxes and contributions on income from self-employment for business entities referred to in point 1 above (business entities that have exercised the right to direct benefits from the budget of the Republic of Serbia), which in accordance with the tax law is due for payment in August 2020, except for flat-rate entrepreneurs, is postponed until the day of submission of the final tax report on income from self-employment for 2020.
Tax and contributions on salaries, salary compensations and personal salary paid by business entities referred to in point 3 above (business entities that did not use the first package of aid) for the accounting period August 2020, as well as advance payment of taxes and contributions on income from the independent activity of flat-rate entrepreneurs referred to in points 3 and 4 above (business entities that did not use the first package of aid and newly established entrepreneurs, who do not submit the PPP-PD Form), which is due for payment in September 2020 in accordance with the law, are due for payment on 5 January 2021. The maturity of the advance payment of taxes and contributions on income from self-employment for business entities referred to in points 3 and 4 above (business entities that did not use the first package of aid and newly established entrepreneurs, who do not submit the PPP-PD Form), which in accordance with the law is due for payment in September 2020, except for flat-rate entrepreneurs, is postponed until the day of submission of the final tax return for taxes and contributions on income from self-employment for 2020.
- Official Gazette of RS, no. 104/2020
- Official Gazette of RS, no. 54/20
- The provisions of Article 6, paragraph 1 of the Law on Accounting (“Official Gazette of the RS”, no. 73/2019) stipulate that legal entities and entrepreneurs, in terms of this law, are classified into micro, small, medium and large legal entities
- All business entities that are not included in the List of users of public funds determined in accordance with the Rulebook on the list of users of public funds (“Official Gazette of RS”, no. 93/19) – resident legal entities in terms of the law governing the taxation of corporate profits; – resident entrepreneurs (entrepreneurs, flat-rate entrepreneurs, agricultural entrepreneur and other entrepreneurs, in terms of the law governing personal income tax); and branches and representative offices of foreign legal entities.
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