Tax Alert, February 2019

Minister of Finance has adopted Rulebook on Amendments to the Rulebook on content of tax balance sheet and other issues relevant for the assessment of corporate income tax liability (hereinafter: “Rulebook”), published in “Official Gazette of RS”, No.8/2019. The reason behind adoption of the Rulebook was the need for harmonization with amendments to the Corporate Income Tax Law (hereinafter: “Law”), which are applicable to determination of corporate income tax liability starting from tax year 2018.

The Rulebook shall enter into force on the eight day following its publication in the “Official Gazette of the Republic of Serbia”.

An overview of amendments, per tax balance sheet items, is provided below:

Item 2: includes income of branch office of non-resident legal entities that is not subject to corporate income tax, in accordance with ratified international agreement; branch office of non-resident legal entity, that is resident of jurisdiction with preferential tax system, shall include, within this item, the income to which provisions of Article 40, paragraph 12 and 13 of the Law apply (prior to amendments, profit arising from concession agreements was included within item 2).

Item 29: in addition to expenses that were reported within this item prior to the adoption of the Rulebook, a branch office of a non-resident legal entity within this item shall report expenses related to income that is not taxable according to ratified international agreement, while a branch office of non-resident legal entity that is resident of jurisdiction with preferential tax system, shall include,within this item, the expenses to which provisions of Article 40, paragraph 12 and 13 of the Law apply.

Item 36:  in addition to expenses that were reported within this item prior to the adoption of the Rulebook, within this item shall include the expenses which arise as a result of change in accounting policy, due to the first application of IAS, IFRS or IFRS for SME.

Item 41: in addition to income that was reported within this item prior to the adoption of the Rulebook, this item shall include income which arises as a result of change in accounting policy, due to the first application of IAS, IFRS and IFRS for SME.

Item 45: in addition to income that was reported within this item prior to the adoption of the Rulebook, this item shall include income related to acquisition of nonmonetary assets, during the realization of concession agreement.

Item 46: in addition to income that was reported within this item prior to the adoption of the Rulebook, this item shall include income from decrease of taxpayer’s liabilities towards the users of public funds, insolvent banks and towards chambers of commerce, when the respective liabilities are included in the Pre-prepared reorganization plan.