Amendments to the Law on Tax Procedure and Tax Administration have been adopted

We hereby wish to inform you that draft amendments to the Law on Tax Procedure and Tax Administration (the Law), have been adopted by the National Assembly of the Republic of Serbia on November 26t 2020, and will enter into force within 8 days of its publication in the RS Official Gazette, i.e. on December 4 2020. Most of the provisions will become applicable as of January 1 2021.

The overview of the aforementioned amendments will be presented in a more detail below. For any questions regarding the application of the Law on Tax Procedure and Tax Administration, please contact Pavle Kutlesic, LL.M., Senior Manager in the Tax Department via pkutlesic@deloittece.com.

General amendments

-  The treatment in the tax-legal relationship of an open-end investment fund, i.e. an alternative investment fund that does not have the status of a legal entity, and which is established in the appropriate register (hereinafter: „the Fund“), has been specified.

-  Registration of taxpayers, i.e. the duty to obtain tax identification number (TIN), is extended to flat-rate entrepreneurs, farmers' entrepreneurs, and other types of entrepreneurs defined by the provisions of the Law on Personal Income Tax.

-  It has been prescribed that the Business Registers Agency cannot register changes in data related to the founder of a business entity, if the new founder is also the founder of another business entity whose TIN was temporarily taken in accordance with this law, due to illegal activities, i.e. unpaid tax liability.

Amendments related to delivery of tax documents

-  The new amendments simplify the procedure of delivering tax acts that can be submitted in electronic form to a natural person who submits tax returns in electronic form, through the portal of the Tax Administration, in which case no additional consent of the natural person is required. To a natural person, who submits tax returns in paper form, the tax act is could be delivered in electronic form, if he agrees with that method of delivery.

-  It is determined that request for refund of overpaid or incorrectly paid taxes, i.e. ancillary taxes, as well as for other types of refund, i.e. for settlement of due liabilities on another basis by rebooking taxes can be submitted in electronic form through the Tax Administration portal or in writing – directly by post.

-  Delivery of tax administrative act to the Fund is done to the address of the registered office of the fund management company stated in the prescribed register, i.e. to a special address for receiving mail registered with the Business Registers Agency and the tax act is considered delivered when delivered to the responsible person of the fund management company, the proxy, i.e. tax representative of the fund management company, as well as the employee of the fund management company.

Amendments related to criminal provisions:

-  Tax fraud related to value added tax has been defined as a new tax crime, as well as changes to certain penal provisions.

-  Within tax fraud related to value added tax, a fine and imprisonment of one to five years are envisaged for a person who submits one or more VAT returns of incorrect content or claims the right to an unjustified VAT refund or tax credit in the previous 12 months, either for themselves or for another person, and the amount of refund or tax credit exceeds one million dinars.

-  Also, a prison sentence of one to five years and a fine are prescribed for a person who fails to submits one or more VAT returns, or submits false returns, or otherwise avoids the payment of value added tax, either for themselves or for another person, in order to avoid one or more VAT payments in the previous 12 months, and the amount of tax avoided exceeds one million dinars.

-  Additionally, if the amount of tax avoided exceeds five million dinars, the perpetrator will be fined and sentenced to two to eight years in prison, and if that amount exceeds fifteen million dinars, a fine of three to ten years and a fine is envisaged.

-  In addition to the mentioned changes, it is envisaged that for natural persons, entrepreneurs and responsible persons in the legal entity - taxpayer who has been convicted of a criminal offense, a security measure of prohibition to perform vocations, activities and duties from one to five years will be imposed.