Following a press conference announcement on 31 March, 2020, the Government of the Republic of Serbia has declared an economic and financial measures program to mitigate the effects caused by the COVID -19 pandemic (“the Program”).

The Program states that the proposed economic measures are temporary and primarily related to the deferral and immediate reduction of certain tax liabilities. The measures are not permanent changes to the tax system.

The Program contains four groups of proposed measures:

Tax policy measures

• Deferred payment of income tax and contributions for the private sector during the state of emergency, with a subsequent repayment of incurred liabilities in installments, not earlier than 2021;

• Deferred payment of advance corporate income tax for the second quarter;

• VAT exemption for donations.

Direct aid to the private sector

• Direct aid to lump sum entrepreneurs who pay tax on real income, and micro, small, and medium-sized legal entities in the private sector – payment of aid in the amount of the minimal salary (during the state of emergency – assumption of 3 minimum salaries);

• Direct aid to large-sized legal entities in the private sector – payment of aid in the amount of the 50% of the net minimal salary (during a state of emergency), regarding employees whose employment has been temporarily suspended by a decision (articles 116 and 117 of the Labour Law).

Measures for maintaining liquidity in the private sector

• Program of financial support to the economy in the COVID – 19 crisis, by the Development fund of Republic of Serbia;

• Guarantee scheme for supporting the economy during COVID-19 crisis.

Other measures

• Moratorium on payment of dividends until the end of the year, except for public companies, and loss of dividend tax on that basis;

• Fiscal stimulus – encouraging domestic demand

Bearing in mind the purpose of the proposed measures, it is the Government’s proposal that the measures shall not be applied to legal entities which have:

• reduced the number of employees during the state of emergency by more than 10% (not including employees engaged for a definite period of time whose contracts have expired during the state of emergency) or,
• temporarily suspended their business before the declaration of the state of emergency, i.e. before 15 March 2020.

By the end of next week, we expect that the Government will adopt appropriate decisions implementing the above mentioned measures into the legal system of the Republic of Serbia.