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Tax Incentives

 

Companies are exempt from Corporate Income Tax for a period of 10 years starting from the first year in which they report taxable profit if they invest in fixed assets an amount exceeding approximately €8 million, and throughout the investment period they employ at least 100 additional employees.

 

 

Corporate Income Tax Credits

 

The amount of tax payable can be reduced by 20% or 80% of the amount invested in fixed assets for the respective tax period. This reduction cannot exceed 50% of the total tax liability for a single year. If not used entirely in the course of one year, this tax credit can be carried forward for a maximum period of 10 years.

 

 

Corporate Income Tax Holiday for Concessions

 

A 5-year tax holiday is granted for concession-related investments, from the day the concession investment has been completed. No tax is due if income is derived before the completion of the concession investment.

 

 

Carrying Forward of Losses

 

The tax loss stated in the tax return can be carried forward and offset against future profits over a period up to 5 years.

 

 

Avoiding Double Taxation

 

If a taxpayer already paid tax on the profit generated abroad, he is entitled to a Corporate Income Tax credit in Serbia to the already paid amount. The same right is enjoyed by a taxpayer who earns revenue and pays Personal Income Tax in another country, provided there is a Double Taxation Treaty with that country.

 

 

Salary Tax Social Insurance Charges Exemptions

 

The employer who hires certain categories of workers on a permanent basis is exempt from paying Salary Tax over the periods of 3 or 2 years.

 

The employer is exempt from paying social insurance contributions over the periods of 3 or 2 years, depending on the category of workers hired.

 

http://www.siepa.gov.rs/files/graphs2010/ENG_Salary_Tax_Social_Insurance.jpg

 

 

Annual Income Tax Deductions

 

For non-Serbian citizens, the annual income is taxed if exceeding the amount of threefold the average annual salary in Serbia. The tax rate is 10% for the annual income below the amount of 6 times average annual salary in Serbia, and 15% for the annual income above the amount of 6 times average annual salary in Serbia. The taxable income is further reduced by 40% of an average annual salary for the taxpayer and by 15% of an average annual salary for each dependent member of the family. The total amount of deductions cannot exceed 50% of the taxable income.

 

 

Value Added Tax Exemptions in Free Zones

 

Income generated through commercial activities in the Free Zones in Serbia is exempted from Value Added Tax. There are six Free Zones, currently operating in the country: Subotica, Novi Sad, Zrenjanin, Sabac, Kragujevac, and Pirot. Three more zones are being prepared in Nis, Smederevo and Uzice. Foreign companies can establish a privately-owned Free Zone based on the project approved by the government.