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Serbia: Corporate income tax changes enacted for 2020

Serbia: Corporate income tax changes enacted for 2020

Serbia’s parliament in December 2019 passed legislation that amends the corporate income tax law, and the legislation was published in the official gazette on 6 December 2019.

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The changes generally are effective from the tax period beginning in 2020 and concern the following items:

  • Bank expenses from housing loans denominated in Swiss francs (CHF): Impairment allowance is tax deductible for the bank in an amount determined in accordance with the law governing the conversion of housing loans indexed in CHF (effective for tax returns for 2019)
  • Tax credit based on outstanding debt of the borrower from housing loans denominated in CHF: Banks are entitled to a tax credit of 2% of the amount of outstanding debt of the borrower in accordance with the law governing the conversion of housing loans indexed in CHF
  • Exemption for investment funds: Resident taxpayers established under the regulations governing investment funds do not determine capital gains or losses from the sale of real estate, shares, and long-term securities, intellectual property rights or investment units. Income generated by the investment funds from the alienation of these assets is excluded from the tax base.
  • Proportional tax incentive, 10-year period begins from the first year in which profit before tax was made: The provision governing the tax incentive is triggered beginning from the first year in which the profit before use of tax losses is made. Furthermore, the existence of capital gains or losses does not affect the beginning of the tax incentive period.
  • Tax credit for service-related revenues from another country: Taxpayers are entitled to a tax credit on revenues from services from another country on which the withholding tax is paid in that country. A tax credit is in the amount of tax paid to the other country, but up to the amount that would be obtained by applying a tax rate of 15% to a base equivalent to 40% of the revenue generated from services.
  • Filing a tax return in the event of termination of tax consolidation: After the tax consolidation is approved, and the related party subsequently elects for separate entity taxation before the end of a five-year term, then all related legal entities have action steps concerning the tax return and must pay the proportional difference of the tax privilege they claimed.
  • Country-by-country report: The requirement is added for an annual report.

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