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News & Knowledge

Serbia: Economic measures for mitigating the effects of the COVID-19 pandemic

14th April 2020

The Republic of Serbia, has adopted a variety of initial measures in order to ease the economic consequences of the COVID-19 pandemic. MSI's Serbian accounting member ZS Tax & Consulting d.o.o. provides a summary.

COVID-19 has spread across the world and countries are faced with challenges and changes on both a social and economic level. The global economy expects significant losses over the coming month as countries plough resources into supporting workers, businesses and their respective economies during the pandemic. Many countries have already adopted specific economic measures, and international emergency funds have been set up.

Serbia has adopted the following initial measures:

  • Moratorium on the repayment of loans provided by the National Bank of Serbia (NBS) – the moratorium will last for at least 90 days or as long as the state of emergency exists. During this period, banks are not allowed to calculate statutory interest or initiate any enforcement procedure or conduct any other legal actions toward debtors in pursuit of debt collection.
  • Tax relief for debtors in enforced collection – in practical terms this means that, during the state of emergency, the Tax Administration will not ex officio annul the agreement. In other words, they will terminate the decision on the rescheduling of payment of the tax due and will not carry out the enforced collection procedure, without an interest being calculated within the stated period.

In addition to the above, the Serbian Government has introduced a range of new economic measures worth 5.1 billion euros to support the economy during the pandemic crisis. The aim is to preserve levels of employment and provide assistance to those companies that have been the most affected by this crisis, namely micro, small and medium-sized enterprises. The measures themselves are divided into 4 parts:

  1. Tax policy measures – the deadline for payment of income and contribution taxes for the private sector will be postponed for the duration of the state of emergency, for a period of at least 3 months. The subsequent repayment of incurred liabilities may be spread over 24 equal instalments beginning at the earliest January 2021. Additionally, the payment of income tax advance payments in the second quarter is delayed and donors will be exempt from VAT.
  2. Assistance to employees – assistance to flat-rate entrepreneurs who pay real income taxes, as well as to employees in micro, small and medium-sized enterprises in the private sector, is reflected in the payment of cash assistance in the amount of 3 minimum wages over the next 3 months. Large private sector companies will be paid 50 percent of the net minimum wage, for employees who were given the decision on cessation of work.
  3. Preservation of liquidity – 2.2 billion euros has been earmarked for liquidity preservation measures. These include the provision of cheap loans for maintaining liquidity and working capital for micro, small and medium-sized enterprises, entrepreneurs, agricultural holdings and cooperatives registered in the relevant registry, via a Development Fund as well as a Guarantee Scheme to support the economy during the Covid-19 crisis for loans for maintaining liquidity and working capital for entrepreneurs, micro, small and medium enterprises and agricultural holdings through commercial banks operating in Serbia.
  4. Assistance to each adult citizen – All adult citizens of the Republic of Serbia will receive 100 euros in RSD equivalent as a direct financial assistance. It is important to note that this programme will not apply to companies that have reduced their employee numbers by more than 10% since the start of the state of emergency.

In conclusion, the Serbian economy is not affected like China is, but it will not recover as quickly as China.

If the virus continues to progress globally and slow down further economic growth, it is likely that many countries will seek funding from international funds.

For now, we can see that Serbia has taken measures that can be accommodated for up to 3 months from its own funds. The Serbian Government’s measures are aimed at encouraging job retention and stimulating business.

About ZS Tax & Consulting d.o.o. - Belgrade

ZS Tax & Consulting is consulting firm established in 2016, in cooperation with one of the leading local law offices Zivkovic Samardzic Law Office, providing tax and accounting services.

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