Serbia: Corporate income tax amendments

Serbia: Corporate income tax amendments

Amendments to the corporate income tax law were effective 1 January 2021. The Ministry of Finance adopted “Rulebooks” (as the regulations are referred to in Serbia) concerning the content of tax balance sheets and other issues relevant for assessment of corporate income tax and concerning the corporate income tax return.

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The Rulebooks (published in the official gazette on 30 December 2020) are effective retroactively for tax periods beginning in 2020.

Provisions in the Rulebooks address:

  • Capital gains realized from transfer of digital property—Capital gains could be realized based on the transfer for consideration of digital property, unless a taxpayer, within the performance of its business activity, acquired the property for sale. Capital gains realized from sale of digital property are not taxable if the funds realized from the sale are invested during the tax period in the share capital of a resident company or investment fund having its center of business activities in Serbia.
  • Capital gains realized from sale of investment fund unit—Capital gains could be realized from transfer for consideration of investment fund unit, thus equalizing the treatment of open-end and closed-end investment funds.
  • Tax treatment of the distribution of remaining net asset value after the dissolution of an investment fund without status as a legal entity—The remaining net asset value distributed in proportion to the investment units to the members after dissolution of an investment fund that does not have status as a legal entity, and that is above the acquisition value of the investment units, is considered to be a capital gain that is included in the tax base in the amount of 50% of the total realized capital gain.
  • Tax treatment of income realized by non-resident legal entity based on membership in alternative investment fund without status as a legal entity—Income realized by non-resident legal entity based on membership in an alternative investment fund which does not have status as a legal entity, is considered to be a dividend subject to withholding tax (unless subject to the provisions of an income tax treaty).
  • Determination of acquisition price of immovable properties acquired before 1 January 2004 for the purpose of determination of capital gain—For capital gain calculation purposes, the acquisition price of immovable properties acquired before 1 January 2004 is the net present value as of 31 December 2003 (in line with the accounting regulations applicable for financial statements for FY 2003) but decreased for depreciation.
  • Newly employed individuals—For purposes of a “tax holiday” regarding investments into non-current (fixed) assets having a value of over one billion dinars and employing more than 100 new employees, the term “newly employed individuals” is defined to exclude individuals that were employed directly or indirectly by a related-party entity of the taxpayer, as measured from the last day of the tax period preceding the investment period.

Read a January 2021 report prepared by the KPMG member firm in Serbia

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