ECONOMIC MEASURES PROGRAM OF THE GOVERNMENT OF THE REPUBLIC OF SERBIA FOR ASSISTANCE TO THE SERBIAN ECONOMY
On March 31, 2020 a program of economic measures was introduced by the Government of the Republic of Serbia with the aim to assist the Serbian economy and to reduce the negative effects caused by the COVID-19 virus pandemic. In the upcoming weeks the Government of the Republic of Serbia intends to adopt legal acts in order to implement the announced measures.
First, it is important to emphasize the following requirements that a business entity must fulfill in order to exercise the rights envisaged by the economic measures program:
1) That the business entity did not reduce the number of employees by more than 10%, during the state of emergency (excluding the part-time employees whose contract expires during the state of emergency);
2) That the business entity did not temporarily suspended its business before the declaration of the state of emergency on March 15, 2020.
In addition, it is also important to emphasize that the economic measures program itself is divided into 4 (four) sets of measures by the Government of the Republic of Serbia.
FIRST SET OF MEASURES
Tax policy measures
One of the envisaged measures is to defer payment of tax arrears during the state of emergency and relates to payment of taxes and contributions to employee salaries. These taxes will be paid in installments by the Private sector legal entities. This measure also applies to deferring taxes on the income from the self-employed activities of all entrepreneurs. All employers who choose to use this measure can use deferral of payment of tax and salary contributions until the beginning of the year 2021, and after that period of time there is a possibility of further deferral of payment of these costs for up to 24 months, without the obligation to pay interest, at the request of taxpayers.
In addition, the first set of measures envisages the postponement of payment of the corporate income tax advance for the year 2020 due in the second quarter of the year 2020 (for the period April-June).
Additionally, all donors who donate their products, or products they trade, to institutions who are directly involved in activities aimed at preventing the spread and treatment of citizens from COVID-19 are exempted from VAT.
SECOND SET OF MEASURES
Direct financial assistance to business entities
This set of measures involves direct payments to business entities in a form of payment of financial aid in the amount of the minimum net wage for entrepreneurs, micro, small and medium-sized companies.
In addition, this set also includes subsidies in the amount of 50% of the minimum net wage for large companies, who by decision terminated the work of their employees in accordance with the provisions of Article 116 and Article 117 of the Labor Law (but not termination of employment).
The distinction is made in line with the estimation that entrepreneurs, micro, small and medium-sized legal entities have far less economic power, and thus are less resistant to the negative effects of the pandemic crisis compared to large enterprises.
THIRD SET OF MEASURES
More favorable loans to businesses
The Third set of economic measures envisages:
1) A program for granting loans for maintaining liquidity and working capital for companies in the segment of entrepreneurs, micro, small and medium-sized legal entities, agricultural holdings and cooperatives, which are registered in the relevant register through the Development Fund of the Republic of Serbia;
2) Guarantee schemes, for supporting the economy in the conditions of COVID-19 crisis, for loans for maintaining liquidity and working capital for companies in the segment of entrepreneurs, micro, small and medium-sized legal entities, as well as farms through commercial banks operating in the Republic of Serbia.
The total value of the economic program measures envisaged by this set of measures is 2.2 billion Euros or 264 billion RSD.
THE FOURTH SET OF MEASURES
Financial assistance to all adult citizens of the Republic of Serbia
This set of measures envisages making direct payments of EUR 100.00 in RSD equivalent to the accounts of all adult citizens of the Republic of Serbia.
Finally, it is important to emphasize that the total effect of the above-mentioned economic measures introduced by the Government of the Republic of Serbia is estimated at around 608.3 billion RSD or approximately 5.1 billion Euros. However, at this point it is necessary to wait for the adoption of all relevant regulations and other legal acts by the Government, because, once they are enacted, there will be a far clearer way of implementing the adopted measures and achieving the proclaimed goals – that is, maintaining the existing employment rate of the population by facilitating business for all businesses in the emerging circumstances, from entrepreneurs to large companies.
A tabular overview of the envisaged measures is presented below.
ECONOMIC MEASURES OVERVIEW:
| Tax policy
measures |
Postponement of payment of taxes and contributions to wages for the private sector, during the state of emergency, with subsequent repayment of incurred liabilities in installments beginning at the earliest from the year 2021. |
| Delaying the payment of the corporate income tax advance for the year 2020 due in the second quarter of the year. | |
| Exemption of donors from the obligation to pay VAT. | |
| Direct assistance to the private sector | Direct assistance to flat-rate entrepreneurs who pay taxes on real income, followed by micro, small and medium-sized enterprises in the private sector – this assistance comes in a form of payment of minimum wage (during the state of emergency in the amount of 3 minimum wages). |
| Direct subsidies in the amount of 50% of the minimum net wage for large companies, who terminated the work of their employees by decision in accordance with the provisions of Article 116 and Article 117 of the Labor Law (but not termination of employment). | |
| Private Sector Liquidity Preservation Measures | Program of financial support to the Serbian economy in the conditions of COVID-19 crisis of the Development Fund of the Republic of Serbia |
| Guarantee scheme for supporting the Serbian economy in the conditions of COVID-19 crisis | |
| Other measures | Moratorium on dividend payments by the end of the year, except for public companies. |
| Fiscal stimulus – direct assistance to all adult citizens |