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Economic measures announced by Serbian Government due to COVID-19 crisis

Economic measures announced by Serbian Government due t

At the press conference held on 31 March 2020, Mr. Siniša Mali, Minister of Finance, and Mr. Marko Čadež, President of Serbian Chamber of Commerce, announced set of measures intended to boost economy in order to ease consequences of the crisis caused by COVID-19.

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As the goal of measures is to preserve the number of employed citizens and support companies whose business is affected during the state of emergency, it is suggested that measures will not apply to:

  1. Companies that laid off more than 10% of their work force during the state of emergency (not counting expiry of temporary contracts during the state of emergency),
  2. Companies that temporarily stopped their business before introduction of the state of emergency, i.e. before 15 March 2020.

Suggested Program of Economic Measures consists of four groups:

I. Tax policy measures,
II. Measures of direct financial aid to private sector,
III. Liquidity measures in private sector,
IV. Other measures.

I. Tax policy measures

This set of measures is related to deferral of tax payment with obligation of repayment of deferred taxes in instalments, not earlier than beginning of fiscal year 2021, and includes the following measures:

  1. Deferral of payment of salary tax and social security contributions for the private sector until beginning of fiscal year 2021 with possibility of additional extension. Deferred obligations will subsequentially be repaid, in not more than 24 monthly instalments without calculated late payment interest. 
  2. Deferral of payment of corporate income tax advance payments for 2nd quarter of 2020.
  3. VAT exemption for donation of goods with a goal of motivating donations to the institutions which are involved in implementation of measures for protection from the disease.

Respective measures will apply equally to all companies irrespective of their size or economic strength.

Total projected value of the measures is RSD 161 billion (cca. EUR 1.37 billion).

II. Measures of direct financial aid to private sector

This set of measures is related to direct payments and aid to the business entities and entrepreneurs with a goal of continuity of salary payments, and includes the following measures:

  1. Direct aid to entrepreneurs, micro, small and medium size companies in the amount of minimum net salary for each employee during the state of emergency (cca. RSD 30.00=). It is envisaged that this measure will include payments for up to three minimum monthly salaries per employee.
  2. Direct aid to large companies in the amount of 50% of minimum net salary (cca. RSD 15.000) for each employee on paid temporary leave in accordance with Articles 116 and 117 of the Labor law.

Listed measures will not limit number of employees who are on paid temporary leave by employer’s decision, nor amount of rights which is determined by employer during the leave.

Total projected value of these measures is RSD 97.3 billion (cca. EUR 828 million).

III. Liquidity Measures for private sector

This set of measures is related to financing loans and guarantee scheme which will be provided with a goal of liquidity improvement during and after the state of emergency, and includes the following measures:

1) Financial support through loans for perseverance of liquidity and working capital for entrepreneurs, micro, small, medium entities, agricultural farms and cooperatives. As a part of the Program, Serbian Development Fund will offer loans in the total amount of RSD 24 billion (cca. EUR 200 million). Repayment period will be 36 months with 12 months grace period. Maximum financial support is also envisaged:

  • up to RSD 5 million for entrepreneurs and micro entities, 
  • up to RSD 25 million for small entities, 
  • up to RSD 50 million for medium entities.

2) Financial support through guarantee scheme provided by the Republic of Serbia to commercial banks which are present in Serbia, for loans in EUR and RSD for perseverance of liquidity and working capital for entrepreneurs, micro, small, medium entities and agricultural farms. Repayment period will be 36 months with 12 months grace period. Maximum value of the loan which can be granted through this program is envisaged to be 25% of revenues in 2019 or EUR 3 million.
Total projected value of the measure is RSD 240 billion (cca. EUR 2 billion).

IV. Other measures

This set of measures is related to stimulation of domestic demand and perseverance of liquidity of business entities, and includes the following measures:

1) Direct aid to Serbian citizens older than 18 year through one-off payment in the amount of EUR 100 for the purpose of stimulation of domestic demand. Total projected value of the measure is RSD 70 billion (cca. EUR 596 million).
2) Moratorium on dividend payments (except for state owned enterprises).

Please note that Decrees for implementation of announced measures are expected in the next 10 days

It will be necessary to see exact texts of decrees in the Official Gazette to have the full and clear picture of the qualifying entities, procedure and timelines.

 

If you have any questions or you need assistance of our professionals, please contact us at tax@kpmg.rs

For previous editions of KPMG Tax Alerts please visit the following web page:

KPMG Tax Alerts


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