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Serbia introduces widely-disputed VAT rulebook

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A VAT rulebook introducing a new form – called POPDV – could drastically and unnecessarily increase the level of complexity of records for businesses.

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Aleksandra Rafailovic

Published in the Serbian Official Gazette No. 80/16, dated September 30 2016, the rulebook has been met with strong criticism, particularly due to its adoption without consultation and the cooperation of the private sector, as well as without taking into account the actual applicability of the amendments.

One of the most controversial provisions include a requirement for reporting specific information on the characteristics of goods or services, such as the name, type, model, quantity, etc. This reporting requirement would have a serious impact for all businesses, but particularly those in large retail chains.

Research has shown that the average number of fields in a tax return in the EU is 39, but with this latest amendment in Serbia, the number of fields in a VAT return would amount to a total of 297 (17 fields in the application form and 280 in the detailed records).

Although officials have stated that the new form is being introduced to better understand the business activities of VAT payers and improve the efficiency of tax collection, it remains to be seen how the additional reporting requirements (including reporting related to tax-exempt items) will contribute towards that goal. EU practices have shown that increasing the number of reporting fields in VAT returns does not contribute to an increase in VAT collection.

The initially prescribed deadline to implement the regulations was merely three months, thus the race towards finding an appropriate software solution has already commenced. Tax professionals have also highlighted the expected increase in human resource expenditures due to the increasing reporting workload, which is in turn expected to result in higher outsourced accounting/tax advising fees.

However, as a result of the joint initiatives of various parties, the Ministry of Finance declared on October 28 2016 that it will defer the implementation of the POPDV form until 2018 and will – in the meantime – work on amending the Serbian Law on VAT in order to eliminate perceived deficiencies.

Aleksandra Rafailovic (aleksandra.rafailovic@eurofast.eu)

Eurofast, Serbia Office

Tel: +381 11 3241 484

Website: www.eurofast.eu

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