At the session held on 30 July 2020, the Government of the Republic of Serbia adopted the Conclusion regarding fiscal benefits and direct aid to business entities in the private sector (hereinafter: the “Conclusion”). Accordingly applied in the implementation of this Conclusion shall be those provisions of the Regulation on fiscal benefits and direct aid to business entities in the private sector and financial assistance to citizens in order to mitigate the economic consequences of COVID-19 (hereinafter: the “Regulation“) that refer to the meaning of terms, the right to direct aid and deferral of payment of taxes and contributions, loss of the right to direct aid, manner of use and payment to employees of funds received on the basis of direct aid.
Below is a summary of the newly adopted measures:
The Conclusion regulates two types of measures:
1. direct aid in the form of non-refundable payment of funds;
2. fiscal benefits in the form of delaying the maturity of certain public revenues.
The Conclusion also indirectly classifies business entities into several categories. The procedure for exercising the right to new measures depends on the group to which a certain business entity belongs.
I. Business entities entitled to use measures prescribed by the Conclusion
Business entities can be classified into the following groups:
1) Business entities (except for large legal entities) that have exercised the right to direct aid from the budget of the Republic of Serbia whose payment was due in July 2020 in accordance with the Regulation. These include entrepreneurs, micro, small and medium business entities who will be paid additional direct aid from the budget of the Republic of Serbia in August and September 2020, in each of those two months in the amount of 60% of direct aid paid to them in July 2020. This group of business entities shall receive additional payments automatically, without the obligation to file an application.
2) Large legal entities (classified as such on the basis of financial statements for the year 2018) that were entitled to direct aid in accordance with the Regulation and did not lose that right are entitled to additional direct aid provided that they submit the SL Form (List of persons for whom a large legal entity is entitled to the payment of non-refundable funds) by 15 August 2020 at the latest, for the months of June and July 2020. The amount of direct aid is determined as the product of the number of employees for whom the decision on termination of work refers to at least 15 working days in June or July 2020 and the amount of 50% of the basic minimum wage for March.
The first payment of direct aid will be made in August (for the accounting period in June), and the second in September (for the accounting period in July) 2020.
3) Business entities which meet the requirements of the Regulation but do not fall into the groups from points 1) and 2) (for example, an entity that was entitled to measures under the Regulation but did not use them) have the right to direct aid in the amount of 120% of the basic minimum net salary for March 2020 per employee for salaries and wages for which they submitted the PPP-PD Form, for the accounting period August 2020, provided that no later than 15 September 2020, they submit the PPP-PD Form for the accounting period August wherein they will enter 5 January 2021 in field 1.4 – date of payment. The number of employees for whom the PPP-PD Form was submitted for the accounting period August 2020 is reduced by the number of employees whose employment with the business entity ended in the period 1 August inclusive with 31 August 2020.
4) Business entities established and registered or have acquired the status of VAT payer after 15 March 15 inclusive with 20 July 2020 can be further divided into two sub-groups:
a. business entities that have employees, i.e. submit the PPP-PD Form – this group submits the application for August no later than 15 September 2020, with the payment date 5 January 2021;
b. business entities that do not submit the PPP-PD Form (flat rate entrepreneur, entrepreneur other person who has no employees, as well as entrepreneur and entrepreneur farmer who pays tax on income from self-employment and has no employees, and has not decided to pay personal wages) – this group exercises the right to direct aid automatically.
This last group of business entities has the right to direct aid in the amount of 120% of the basic minimum net salary for March 2020 (in the case referred to in point a. calculated per employee), and direct aid will be paid in a lump sum in September 2020.
II. Payment of direct aid; deadline for use of paid funds
Payment of direct aid from the budget of the Republic of Serbia to business entities from points 1-4) is made to a special purpose account – COVID-19 with the bank that maintains the current accounts of these business entities. Direct aid from the budget of the Republic of Serbia to these business entities can be used exclusively for the payment of salaries and compensation of salaries to employees. Funds on the special purpose account – COVID-19 are exempt from forced collection in accordance with Article 13, paragraph 13 of the Regulation.
For business entities that have open special purpose accounts – COVID-19, payments of direct aid from the budget of the Republic of Serbia is made to those accounts. Those business entities that do not have open special purpose accounts – COVID-19 will have such opened in order to realize direct aid payment.
Business entities use the funds received on the basis of direct payments from the budget of the Republic of Serbia by 31 October 2020 at the latest, after which the special purpose accounts – COVID-19 will be closed, and unused funds from those accounts will be transferred to a special budget account.
III. Fiscal benefits
In terms of fiscal benefits, the Conclusion enables postponement of maturity for payment of public revenues, for one month, as follows:
1. taxes and contributions on salaries and compensation of salaries and personal earnings of entrepreneurs, which are paid for the month of August;
2. advance payment of taxes and contributions on income from independent activity of the entrepreneur due for payment in August, i.e. in September for entrepreneurs from item 3. of the Conclusion.
However, these measures do not prescribe additional postponement of advance payment of corporate income tax.
1. Tax and contributions on salaries, salary compensations and personal salary paid by business entities that submitted the PPP-PD Form for August 2020 with the entered date of payment 05.01.2021., are due for payment on 5 January 2021. The rule applies to all four groups of business entities, noting that, in the first two groups of economic entities (those receiving direct aid automatically, as well as large legal entities), the decision not to use the right to postpone taxes and contributions does not affect the right to direct aid. However, the use of direct aid and fiscal benefits are related for those business entities that have not used the rights from the Regulation (business entities under point 3. of the Conclusion).
2. The following applies to the rules on deferral of advance payment of income taxes and contributions from self-employment:
(a) Entrepreneurs who were paid direct aid in July (entrepreneurs under point 1. of the Conclusion) are deferred of taxes and contributions to income from self-employment, as follows:
− for flat rate entrepreneurs, the advance payment due in August is deferred and will be due on 05.01.2021;
− for entrepreneurs who keep business books, the advance payment due in August is deferred until the day of submitting the final tax return for income taxes and contributions from self-employment for 2020.
(b) Entrepreneurs who did not use measures prescribed in the Regulation (entrepreneurs under points 3 and 4 of the Conclusion), are deferred of income taxes and contributions from self-employment as follows:
− for flat rate entrepreneurs, the advance payment due in September is deferred and will be due on 05.01.2021, automatically;
− for entrepreneurs who keep business books, the advance payment due in September is deferred until the day of submitting the final tax return for income taxes and contributions from self-employment for 2020. Their advance payment is postponed only if they have opted for both direct aid and fiscal benefits.
IV. Loss of the right to use the measures
A business entity loses the right to use the measures from the Conclusion if, in the period starting from 15 March 2020 until the expiration of 3 months from the last payment of direct aid under this Conclusion, it reduces the number of employees by more than 10%, not counting employees that concluded an employment agreement for a definite period before 15 March 2020 for the period ending in the period defined herein.