New Measures for Mitigating Economic Consequences of COVID-19

New Measures for Mitigating Economic Consequences of COVID-19

December 30, 2020

I REGULATION OF THE GOVERNMENT OF THE REPUBLIC OF SERBIA

The Government of the Republic of Serbia adopted the Regulation on the Procedure and Manner for Deferral of Payment of Due Taxes and Contributions for the Purpose of Mitigating Economic Consequences Caused by COVID-19, which was published in the Official Gazette of RS no. 156/2020 of December 25, 2020 (“the Regulation“).

This Regulation specifies the procedure and manner of deferring the payment of due taxes and contributions for mandatory social insurance, the maturity whereof was deferred in accordance with the Regulation on Fiscal Facilities and Direct Payments to Economic Entities in Private Sector and Financial Assistance to Citizens for the Purpose of Mitigating Economic Consequences Caused by COVID-19 (“Official Gazette of RS”, no. 54/20, 60/20 and 65/20 – other law) and Government Conclusion (“Official Gazette of RS”, no. 104/20 and 106/20).

This Regulation shall enter into force on January 2, 2021.

Economic entities that opted for deferral of the maturity of taxes and contributions shall be subject to deferral of such tax obligations to maximum 24 equal monthly instalments without interest payment during the period of deferral and without any special tax (administrative) procedure for payment deferral.

Taxes and contributions for salaries, salary contributions and personal salaries

Total amount of due obligations based on taxes and contributions for salaries, salary contributions and personal salaries shall be deferred so that the first instalment shall be due on February 10, 2021 and each subsequent instalment on the same date in the following months.

Monthly instalment in this case cannot be lower than RSD 1,000.

Corporate profit tax

Total amount of due obligations based on advance payment of corporate profit tax shall be deferred so that the first instalment shall be due on the 10th day in the month following the month when final tax application was filed for corporate profit tax for 2020 i.e. for tax period starting in 2020, and each subsequent instalment shall be due on the same date of the following months.

Exceptionally, for taxpayers with fiscal year different that the calendar year, who filed final tax application by January 31, 2021 and whose tax period ends in 2020, the first instalment shall be due on February 10, 2021 and each subsequent instalment on the same date in the months to follow.

Monthly instalment may not be lower than RSD 2,000.

Taxes and contributions for income from independent activity

Total amount of due obligations on basis of advance payment of taxes and contributions for income from independent activities shall be deferred so that the first instalment shall be due on the 10th day of the month following the month when final tax application was filed for income from independent activity for 2020, and each subsequent instalment shall be due on the same date in the months to follow.

Monthly instalment may not be lower than RSD 1,000.

Total amount of mature obligations relating to advance payment of taxes and contributions for income from independent activities of flat-rate entrepreneurs shall be deferred so that the first instalment shall be due on the February 10, 2021 and each subsequent instalment on the same date in the months to follow.

Economic entities may, even before the expiry of the stated periods, to fully pay the owed taxes and contributions that are subject to deferral. However, the right to deferral may not be exercised by entities that fail to submit final tax application for corporate profit tax for 2020 in the prescribed period i.e. for the tax period starting from or ending in 2020.

Contributions whose payment has been deferred in accordance with this Regulation shall be deemed paid for the purpose of realising the right to pension and disability insurance, health insurance, realising the right in case of unemployment and right to financial support to families with children, as well as exercising the rights for other purposes.

II DECISION OF THE NATIONAL BANK OF SERBIA

The National Bank of Serbia (“NBS“) has enacted the Decision on temporary measures for banks for the purpose of adequate management of credit risk in the circumstances of COVID-19 pandemic and the Decision on temporary measures for providers of financial leasing for the purpose of adequate management of credit risk in the circumstances of COVID-19 pandemic, which have been published in the Official Gazette of RS no. 150/20 of December 14, 2020.

Both decisions entered into force on December 15, 2020.

By adoption of the stated decisions, the NBS prescribes the measures and activities that banks and providers of financial leasing are obliged to apply for the purpose of adequate credit risk management, which implies timely identification of possible difficulties with debtors and undertaking relevant steps.

Namely, banks and providers of financial leasing shall be obliged, upon request of a debtor, to allow a facility for payment of obligations to such debtor (natural person, farmer, entrepreneur and economic entity) that is incapable of settling his obligations to the bank and/or provider of financial leasing due to the circumstances caused by COVID-19 pandemic, or may have difficulties settling such obligations.

Who shall be entitled to facilities?

The NBS estimated that unemployed persons have particular need for facilities as they are debtors whose average net monthly income in the previous three months was below the average salary in Serbia, as well as debtors with average net monthly income in the previous three months up to RSD 120,000 whose net monthly income was reduced by 10 percent or more compared to the income before March 15, 2020 and whose level of credit debt i.e. burden of monthly income by credit and other obligations exceeds 40 percent of that income.

As regards farmers, entrepreneurs and companies, the NBS estimated that facilities for payment of debt would be particularly significant for debtors who had a drop in business income in 2020 i.e. drop in trade of minimum 15 percent compared to 2019, or if the debtors ceased to operate for a continuous period of minimum 30 days due to COVID-19 pandemic.

Deadline for applications

All debtors that meet the prescribed requirements may file to the bank and/or provider of financial leasing a request for facility by e-mail or regular mail, as well as directly in business premises by April 30, 2021, whereas the bank i.e. provider of financial leasing will be obliged to decide upon the request of the debtor and to notify the latter on the decision within 30 days after the receipt of the request.

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