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Tax Alert - April 2015

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Information regarding the submission of annual personal income tax returns

As of April 1st, 2015 tax returns for determination of annual personal income tax for 2014 should be submitted only in electronic form, through the Tax Authority’s web portal e-Porezi. Taxpayers who have not yet submitted returns for determination of annual personal income tax for 2014 are required to submit it in the PPDG-2R form, prescribed by the Rulebook on tax return forms for the determination of personal income tax payable by way of assessment. In order to submit the tax return electronically a person should have a valid digital certificate (electronic signature). A taxpayer may authorize another person (with a digital certificate) to submit the tax return electronically.  

Please note that taxpayers of the annual personal income tax are individuals – residents, and non-residents, for income generated on the territory of the Republic of Serbia, whose net annual income exceeds the threshold of three average annual salaries in the respective year, according to data published by the Statistical Office of the Republic of Serbia (2,211,336 RSD).

Information regarding the submission of corporate income tax returns

As of April 1st 2015 tax returns for corporate income tax, except withholding tax, should be submitted only in electronic form, i.e. corporate income tax returns (Form PDP) are submitted through the Tax Authority’s web portal e-Porezi. It should be noted that forms prescribed by the following bylaws are also to be submitted electronically: Rulebook on the contents of the tax balance and other issues relevant for assessing corporate income tax, Rulebook on the means of reporting income and expenses for assessing profits realized by a nonresident taxpayer’s permanent establishment on the territory of the Republic of Serbia and the Rulebook on the means of classifying fixed assets into groups and the means of determining tax depreciation.

New rulings of the Ministry of Finance

Several Ministry of Finance rulings have been published in the past period aimed at clarifying and elaborating the implementation of provisions of the Law on value added tax. Additionally, two rulings related to the implementation of the Law on audit and the Law on accounting, which affect taxation in Serbia, have also been published. The following have been selected:

The place of supply for the organization of clinical drug trials and performing clinical drug trials

The place of supply for clinical drug trials is considered to be the place of the service recipient’s business activity, or the place where the service recipient’s permanent establishment is located. On the other hand, the place of supply for services of organizing clinical drug trials is deemed to be the place where service provider is located.

(Ministry of Finance Ruling, no. 011−00−64/2014−04 from January 5, 2015)

Determining the VAT base in case when the supply of goods is made at price lower than the purchase price

The basis for VAT calculation is the amount of money, goods or services which the taxpayer receives or should receive as remuneration for the supplied goods or services from the goods and services recipient, or by a third party, without VAT, and the same principle is applied in case a VAT payer is performing a supply of goods at a price lower than the purchase price.

(Ministry of Finance Ruling, no. 011−00−599/2014−04 from January 12, 2015)

The right to deduct input VAT computed for the supply of goods stored in a customs warehouse in 2012, as well as VAT paid for the importation of those goods

In case when the VAT payer purchased natural gas in 2012, which was at the time of supply stored in a customs warehouse and was subsequently imported, the VAT payer has the right to deduct both input VAT computed by the supplier and VAT paid during import, assuming that other legally prescribed conditions are met. If the VAT payer did not use the right to deduct the previously mentioned input and import VAT during the VAT period when the right was acquired, it can be deducted in one of the following VAT periods.

 (Ministry of Finance Ruling, no. 011−00−575/2013−04 from January 13, 2015)

The preparation of transfer pricing report for the audited entity by the audit company in the year for which an audit of the entity’s financial reports is performed

Auditing companies can prepare the transfer pricing report of the audited entity in the same year in which the audit is performed, if the transfer pricing analysis does not affect the valuation of financial statement positions. The auditing company should always consider the effect of the transfer pricing analysis on the entity’s financials, where there is a possibility to perform these services simultaneously.

(Ministry of Finance Ruling, no. 011−00−1125/2014−16/2 from February 3, 2015)

Determining the difference between entertainment and advertising expenses

When determining the difference between entertainment and advertising expenses, for accounting and tax purposes, the general rule states that expenses for advertising purposes are incurred under the same conditions and aimed at a greater number of unknown persons (as regulated by internally drafted documents on the amount of recognized expenses), while entertainment expenses are aimed at particular persons, determined ahead of time.

(Ministry of Finance Ruling, no. 430−00−379/2014−08 from March 30, 2015)

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