Amendments to the Law on Tax Procedure and Tax Administration

Amendments to the Law on Tax Procedure and Tax Administration

December 11, 2020

The National Assembly of the Republic of Serbia adopted the Law amending the Law on Tax Procedure and Tax Administration that was published in the Official Gazette of RS, no. 144/20 of November 27, 2020 (“the Law“).

The main reasons for adoption of the Law are contained in creation of legal basis for the taxation system in the Republic of Serbia to cover open investment funds i.e. alternative investment funds that do not have capacity of legal entity and which are entered into relevant register in accordance with law, as well as in further simplification of tax procedure and improvement of electronic communication between competent tax authorities and taxpayers.

These amendments shall enter into force on December 5, 2020, whereas certain provisions indicated further in the text shall enter into force on a later date.

The administration of unique information system for local tax administrations shall be taken over by the Ministry of Finance – Tax Administration no later than January 1, 2022. Please be reminded that citizens can see all their tax liabilities at one place through unique information system, and they can also settle these obligations electronically, through special Internet portal (available here).

Expansion of the scope of taxpayers

The key amendments refer to the expansion of the scope of entities who may be parties in a legal tax relationship. Namely, in a legal tax relationship the parties to the Tax Administration may now include, beside natural and legal entities, an open investment fund i.e. alternative investment fund that has no capacity of legal entity and which has been entered into relevant register (“the fund“).

Fund management company shall exercise the activities relating to fund’s tax obligations on behalf of and in the name of the fund (it shall file registration application, submit tax applications, receive tax and administrative acts, keep business books and records for taxation, it shall exercise fulfilment i.e. payment of fund’s tax obligations etc.).

Filing of application and submission of tax acts in electronic form

A request for refund of excessive or wrongly paid taxes i.e. auxiliary tax duties, as well as for tax refund or settlement of due liabilities on different basis through tax transfer to another account may be filed by taxpayer in electronic form through Tax Administration portal. Taxpayers will be able to use this possibility from January 1, 2021.

A tax act can also be submitted electronically to a natural person filing tax applications in electronic form, through Tax Administration portal, in which case no additional consent from a natural person shall be requested. The natural person filing tax applications in paper form shall receive tax acts in electronic form if such person agrees to such form of submission.

Assigning and revoking of TIN

The provision regulating temporary revoking of TIN in tax procedure has been specified so that the Tax Administration will exceptionally assign TIN if due and unpaid liabilities relating to public revenue have been generated in relation to business activity, and if such liabilities refer to the legal entities that were deleted from the appropriate registers according to final decisions of relevant authorities in bankruptcy proceedings.

In addition to the previously prescribed obligation of the Business Registers Agency (“BRA“), under which BRA may not delete, register statutory changes and change the data referring to the entities subject to ongoing tax control and whose TIN has been temporarily revoked, another obligation has been stipulated: BRA may not register acquisition of share or shares in companies, or incorporation of new companies, in cases where the founder to be registered is a legal entity or entrepreneur subject to a measures of tax police or subject to temporary revoking of TIN; failure to abide by this provision is subject to fine for offence.

Taxpayers whose TIN was temporarily revoked before the day of entry into force of these amendments may apply for TIN reinstitution after the amendments enter into force.

Fulfilment of tax obligation

It is stipulated that tax obligation may be fulfilled by giving assets instead of payment i.e. replacing fulfilment when tax obligation exceeds RSD 50,000,000, in a manner and under the terms specified by the decision of the Government of RS, and only in cases where the Republic has an interest in acquiring the assets concerned, and the day of fulfillment of tax obligation by giving assets instead of payment i.e. by replacement of fulfilment, shall be deemed the day of certification of the agreement whereby the Government act on transfer of assets to the property of the Republic has been realised.

The deferral of payment of due taxes i.e. undue tax obligations shall be approved in the manner and under the terms specified by the Government, for the purpose of mitigating economic consequences of the pandemic, force majeure or other extraordinary event during a calendar year, and it shall apply retroactively – from January 1, 2020.

New criminal offence in taxation

Criminal offence in taxation Ungrounded expression of amounts for tax refund and tax credit has been deleted and a new one has been added – Tax fraud in relation to Value Added Tax, which implies the following executive actions and penalties:

  • Whoever had an intention for himself or another person, in a period of previous 12 months, to exercise the right to ungrounded refund of Value Added Tax or tax credit against Value Added Tax, file one or more VAT applications with untrue contents and the refund or tax credit amount exceeds one million dinars and
  • Whoever had an intention for himself or another person, in a period of previous 12 months, to fully or partly avoid the payment of Value Added Tax, fails to file one or more VAT applications, files one or more VAT applications with untrue contents or has the same intention to otherwise avoid VAT payment and the tax intended for avoiding exceeds one million dinars

shall be sentenced to imprisonment from one to five years and fined.

There is also a more severe form prescribed, so if the amount of the stated VAT exceeds five million dinars, the perpetrator shall be sentenced to imprisonment from two to eight years and fined, but there is also the most severe form – if the amount of the VAT exceeds fifteen million dinars, the perpetrator shall be sentenced to imprisonment from three to ten years and fined.

A natural person, entrepreneur and responsible person in a legal person – taxpayer, shall also be pronounced a safety measure for this criminal offence – prohibition to perform the job, activity and duty for a period of one to five years.

This article is to be considered as exclusively informative, with no intention to provide legal advice.
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