Adopted initiative by NALED and Digital Community for limiting the increase of tax to flat-rate taxpayers
Finalizing the year, the Government of Serbia and the Ministry of Finance adopted the initiative of NALED and the Digital Community to extend the validity of Article 6 of the Regulation on flat-rate taxation and the limitation prescribing that the tax liabilities of flat-rate entrepreneurs could not be increased by more than 10% per year. This solution will facilitate work for a large part of the total of 120,000 flat-rate taxpayers in Serbia, and the extension of the limit will be valid for the next year.
The initiative was submitted due to the fear that the change in the method of calculating taxes would significantly increase the obligations of many entrepreneurs, which, in the conditions of the global crisis, could affect the closure of their businesses or escape to the gray zone and the growth of shadow economy in our country.
- Entrepreneurs are a significant part of our economy. They represent 48.8% of the total number of taxpayers and are also an important factor in terms of employment because together with their employees there are almost 400,000 of them, which represents a fifth of all those employed in the business sector in Serbia. We need to provide them with a predictable and stimulating business environment in order to continue the positive growth trend in the number of entrepreneurs. In 2020, almost 30,000 new entrepreneurial businesses were established, last year 34,378, and already in the first half of 2022, another 20,247 - points out NALED’s Policy Manager Irena Đorđević.
According to her, the next major reform that could help flat-rate entrepreneurs (and "bookkeeping" entrepreneurs who do not pay themselves wages) in 2023 should be the improvement of the tax and contribution payment procedure. NALED's initiative is that these two groups of entrepreneurs pay their obligations to one instead of four payment accounts.
The analysis carried out by NALED as part of the StarTech program to support innovation and digital transformation of the Serbian economy showed that this reform would be very important, because states and entrepreneurs lose more than 260 million dinars in correcting errors and rearranging tax and contribution payments. Estimates show that each request for rearranging means an average cost of 5,280 dinars and requires a small amount of involvement of Tax Administration officials who have to compare payments and debts, make a decision and complete the bookkeeping.
The fact that the number of errors is related to the number of payment accounts can be seen from the number of rearranging requests – for flat-rate entrepreneurs and those practicing bookkeeping but not paying a salary for the owner, who pay their liabilities via four different accounts, the number of requests is 2.5 per 10 entrepreneurs, while for those who pay themselves salary and use only two payment accounts, the number of submitted requests is 0.1 per 10 entrepreneurs.
- The analysis estimates that entrepreneurs make more than 10 million payments annually, of which about 90% are made precisely by entrepreneurs who have four payment accounts. According to the data for 2021, 50,000 requests for rebooking were submitted to the Tax Administration, which is less than 5% compared to 10.7 million payments, but when we look at it in relation to the number of entrepreneurs, we see that we have two requests for rearranging for every 10 entrepreneurs - says Đorđević.
According to the data of the Business Registers Agency, 308,000 entrepreneurs are currently registered in Serbia. The most numerous are flat-rate entrepreneurs (more than 120,000), followed by self-paid entrepreneurs, who are half as many.
The StarTech project was launched at the end of 2020 in order to support the digital transformation of small and medium-sized enterprises. It is part of a three-year project for the promotion of innovation and technological development, supported by Philip Morris in Serbia and implemented by NALED in partnership with the Government of Serbia.
