Serbia/Changes to the Taxation System Announced | karanovic/nikolic

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In the face of a significant budget deficit, the Serbian Government is making plans to overhaul the Serbian tax system by the beginning of the autumn. Even though all of the details have not been made public yet - corporate income tax (CIT), value added tax (VAT), personal income taxes and excises will certainly be increased. Officials from the Ministry of Finance and Commerce announced that, starting from 1 October 2012, the CIT rate will be increased from its current 10% to 15%, whilst the 18% VAT rate will probably see an increase up to 20%. No information was released in relation to the amount of the increase that is expected for personal income taxes and excises.

In addition to the increase of the taxes, word has it that Serbia plans to introduce changes in the system of taxation relating to personal income by introducing progressive tax rates. Even though the Ministry of Finance and Commerce has not officially proposed such measures, it seems that the notion of progressive taxation would be strongly welcomed by the Serbian PM, a socialist Ivica Da?i?. We will soon see whether this is indeed the case.

It is yet to be seen whether these measures will be successful and bring the deficit down from the current 7% to a reasonable 4% GDP, or whether they will merely result in increased tax evasion and reduced commerce activity.

Source: http://www.karanovic-nikolic.com/2012/08/10/serbiachanges-to-the-taxation-system-announced/

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