Tax Alert, January 2020

Rulebook on content of tax balance sheet and other issues relevant for the assessment of corporate income tax

On 28 December 2019 Rulebook on content of tax balance sheet and other issues relevant for the assessment of corporate income tax (“Official Gazette of RS”, No. 20/2014, 41/2015, 101/2016, 8/2019 and 94/2019, hereinafter: “Rulebook”) has been published. The reason behind adoption of the Rulebook was the need for harmonization with the provisions of Corporate Income Tax Law (hereinafter: “the Law”), which are applicable to determination of corporate income tax liability starting from tax year 2019.

Rulebook comes into force on 1 January 2020, and is applicable on corporate income tax calculation for 2019.

In accordance with the Rulebook, previous item 25 – Marketing and advertising expenses, has been excluded from tax balance sheet form, as, starting from preparation of tax balance sheet for 2019, the limitation for deductibility of such expenses will no longer be applicable.

Overview of amendments (additions), per tax balance sheet items, is provided below:

Item 36: includes research and development expenses which are deductible in double amount, in accordance with Article 22g of the Law, i.e. the amount of expenses stated in summary of documentation that the taxpayers, which applies Article 22g of the Law, submits with tax balance sheet.

Item 40: includes the amount of capital gain tax paid abroad (item 2 of Annex 2 of PB1 form), in relation to which the taxpayer has recorded expense in its books. This amount is to be stated only if the taxpayer has opted to use the right prescribed by Article 53b of the Law, i.e. only if the taxpayer opts to use tax credit related to capital gain tax paid abroad.

Item 43: includes the amount determined due to reduction in percentage of usage of fixed assets for R&D purposes, which increases tax base, calculated in accordance with Article 3 of Rulebook on R&D expenses.

Item 44: includes the amount which increases tax base in tax period when the application for innovation registration is rejected by competent authority, in accordance with Article 4, Paragraph 5 of Rulebook on conditions and methods of exempting the qualified income from the corporate income tax base (“Official Gazette of RS”, No. 50/2019, hereinafter: “Rulebook on qualified income”).

Item 50: includes the amount of qualified income which, in accordance with Article 25b of the Law, is exempt from taxation, and stated within item 5 of OKP form, prescribed by Rulebook on qualified income.

When it comes to appendices of the tax balance sheet, Rulebook introduces new Annex 2 of PB1 form, which is used to determine tax credit related to capital gain tax paid abroad, in accordance with article 53b of the Law.

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