City of Kragujevac to Become One of Owners of Zastava Oruzje

Zastava Oruzje, the most important factory in the Serbian arms industry, will not have to settle its obligations toward the city of Kragujevac, because the local self-government has adopted the decision to write off the company’s debt of RSD 2.6 billion. According to the draft decision which will be adopted at tomorrow’s session of the City Assembly, the long-standing debt will be turned into the share capital of Zastava Oruzje, whereby the city of Kragujevac will become one of the owners of the company which is the backbone of the Serbian military industry. The decision on the conversion of the debt into the company’s capital is based on the decision of the Government of Serbia of August 2022.

The claims of the city of Kragujevac in the amount of RSD 2.6 billion pertain to the unrealized income of the local self-government based on the property and employee wage taxes that Zastava Oruzje did not pay until December 31, 2016.

With obligations amounting to around RSD 10 billion, Zastava Oruzje is one of the biggest tax debtors in Serbia. The factory, however, owes a lot on other bases as well, and its biggest creditors are Energetika Kragujevac, the city heating plant owned by the state, the Development Fund of the Republic of Serbia and the Pension and Disability Insurance Fund. The operations of Zastava Oruzje are also burdened by some outstanding debts. Due to its financial problems, the company has not been able to regularly meet its obligations toward the employees, which is why certain workers, before retiring, filed lawsuits against the employer.

Other military factories in Serbia also have unsettled tax obligations and various debts, which is why the Government of Serbia adopted the decision this July according to which state receivables should also be turned into the companies’ share capital.

Zastava oružje a.d. Kragujevac

Grad Kragujevac

Energetika d.o.o. Kragujevac

Vlada Republike Srbije

Fond za razvoj Republike Srbije Niš

Republički Fond za penzijsko i invalidsko osiguranje

Zastava oružje

City of Kragujevac

Energetika Kragujevac

Toplana Kragujevac

Government of Serbia

Development Fund of the Republic of Serbia

Pension and Disability Insurance Fund

ownership

tax debt

conversion of debt into capital