Start legally - the first info day about tax exemption measure for new businesses

On Monday, 8 October at Metropol hotel in Belgrade, the first info day was held for public administration officers regarding the implementation of tax exemption measure for new businesses, whose aim is to encourage legal entrepreneurship among young, recently graduated high school or college and faculty students, as well as the unemployed persons registered by the National Employment Service.

The representatives of Tax Administration presented the novelties introduced by the tax exemption measure, as well as the rights and obligations of beneficiaries and the manner of exercising the right to this incentive. The participants had an opportunity to hear more information from the Guide for implementation of tax exemption measure, and provide their own contribution in finalizing this document.

The amendments to the Law on Personal Income Tax and Law on Contributions for Mandatory Social Insurance adopted in December last year launched the exemption from labor taxes and contributions for new businesses starting from 1 October 2018, and they will be exempted from paying these liabilities during their first year of work. The right to this exemption is provided during a period of 12 months from the date of registration of a company or entrepreneur.

The tax exemption measure can be used by those who register as a business or entrepreneur, if they fulfill one of the following criteria:

• They completed education (high school, college or faculty) during a period of 12 months prior to establishing a business.
• They have been registered in the National Employment Service for at least six months

The additional condition for using the measure is that all founders need to be registered as employees in their company, while entrepreneurs need to be registered in personal salary regime, which implies an obligation of bookkeeping and hiring an accountant. The total earnings of each employee in the tax exemption regime must not exceed the amount of triple average annual salary in Serbia, in the year prior to the year of registration – in 2018, this accounted for a gross amount of 2,375,136 RSD. The tax exemption lasts for 12 months since the date of registration, which means it can last shorter for employees, depending on the moment when they were hired.

Regarding the right of persons employed under this regime, they are entitled to an adequate fee for their work, as agreed with their employer. During the period of tax exemption, they are entitled to use the healthcare insurance, and in case of being temporary unable to work (sick leave), the beneficiaries are entitled to a reimbursement of salary in accordance with the law.

The beneficiaries do not automatically have the right to pension insurance during the tax exemption period, but the employers can opt to pay the contributions for pension and disability insurance for themselves and the employees, on a voluntary basis.

After Belgrade, info days will also be organized in Novi Sad (11 October), Novi Pazar (23 October), Niš (25 October) and Kragujevac (29 October), in order to have all relevant stakeholders timely informed about the details regarding the tax exemption measure.