Tax exemptions for beginners in business from mid-2018 only – Amendments to three laws needed for implementation

Beginners in business might start counting on exemptions from taxes and contributions in their first year of operations, as well as fees and compensations, from mid-2018 only.

Although it has been announced in the past months that the measures might be implemented in early 2018, this will probable be prolonged until June, when the new regulations should start being implemented.

– By the end of December, the laws that might enable this should be amended, which will be adopted at one of the sessions of the National Assembly of Serbia by the end of the year. The NALED, which initiated these measures, advocates the start of implementation on March 1, whereas the Tax Administration believes that it should happen on September 1. The solution will probably split the difference, making June 1, 2018, the approximate date of the implementation – the Blic source says.

The working group in charge of this issue consists of representatives of the NALED, the Ministry of Finance and the Tax Administration.

In order for these exemptions to be put into practice, three laws will need to be amended: the Law on Individual Income Tax, the Law on Social Insurance Contributions and the Law on Income Tax, and tax return forms need to be modified as well.

For this reason, those who are counting on these exemptions in starting their own business should perhaps wait for the new regulations to be implemented.

One of the measure meant to facilitate starting a business is exemption from paying wage taxes and contributions in the first year, which should pertain to both the owners and the employees, according to earlier announcements.

More precisely, the measure would pertain to those who are starting a business from the employment service and those who are “drawing” workers from the employment service records. There is also the proposition of having beginners in business paying lower income taxes, but also lower fees and contributions. Both measures should remain valid for one year from the starting of the business.

Current expenses

The expenses of founding an entrepreneurial business range between RSD 4,610 and RSD 31,610, whereas the costs of founding a limited liability company are nearly twice as high, ranging between RSD 10,370 and RSD 57,370.

When it comes to monthly expenses for wage taxes and contributions, it has been determined that an entrepreneur needs to set aside RSD 12,245 to RSD 32,892, whereas a LLC needs RSD 14,813 a month to meet the costs. These expenditures vary depending on the legal form, the local self-government in which the business is registered and other optional costs.

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