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Slobodan Mihajlovic |
Serbian lawmakers recently adopted several laws as well as amending to the tax proceedings and administration laws. The main reason for making these amendments is to comply with the law on minor offences and the law on the organisation of courts, as well as fine tuning the tax system, especially in the area of the settlement of tax obligations as well as defining the earnings of local municipalities.
Based on the amendments, jurisdiction to conduct tax offence proceedings would be transferred from the tax authority to the magistrates court (first instance) and to the higher magistrates court (in the second instance). Sentences related to collection of the fines are under the jurisdiction of the court, and the costs of the tax offence proceedings became the court expenses as opposed to being costs to the tax authority.
Previously, the prescription time of three years for taxpayers to demand their rights, and five and 10 years for tax authorities to investigate irregularities of taxpayers has been changed to five years both for the taxpayers and the tax authorities. In connection with this, a taxpayer has right to change his/her tax return(s) two times within five years instead once within 12 months, as it was until recent changes. Mistakes in tax returns recognised and corrected by the taxpayer before tax control will not be treated as tax offences.
The tax authorities at the local level are in charge of residence certificates.
As property taxation is now in the jurisdiction of local governments, the new law specifies the competences of the local government in tax proceedings. Namely, the relevant local authorities have the same rights and obligations as the tax authorities, except the rights and obligations that are under the exclusive jurisdiction of the tax authorities that are such as identification and registration of taxpayers, the assessment of the tax base with the methods of monetary evaluation and cross-evaluation and the disclosure of tax crimes.
In order to ease the burden of taxpayers who are delayed in settling tax obligations, the payment of the debt has been ordered so that the actual tax due is handled first followed by the interest charged and then the costs of tax proceeding such as court expenses. This order is represented in most countries of the EU. A scheduled amount shall be paid from January 1 2011 according to the agreed terms and conditions with the authorities. The new law provides for a reduced interest rate of 10% (previously 15%) charged monthly on the total amount of the tax debt.
Taxpayers that are in the process of reorganisation or a bankruptcy procedure may be allowed a delay in payment of tax debt but this will be no longer than 60 months. For those taxpayers interest of 10% is still applicable during the duration of delay period.
To encourage financial discipline, the amendments introduce the possibility to impose prohibition of certain activities for a period of six months to three years for taxpayers who exercise tax violations, within two years from the day of first conviction for the same kind of tax offenses.
Taking into account that the investment projects have strategic importance for Serbia, as well as foreign investment that significantly contributes to the development of some industries, the law provides for the write off of taxpayer's debt to the state budget, whose structure is changed based on the assumed contractual obligations from the Republic.
With this fine tuning of the tax system, Serbian government are trying to ease the administrative burdens and to simplify the procedures for domestic as well as foreign investors.
Slobodan Mihajlovic (slobodan.mihajlovic@eurofast.eu)
Eurofast Global
Belgrade Office/Serbia
Tel: +38163336398
Website: www.eurofast.eu
