Corona virus: Government tax and financial measures

On 31.03.2020, the Minister of Finance of the Republic of Serbia verbally published a set of measures to assist the Serbian economy in mitigation of the negative effects of the Corona virus epidemic. The official decree on the measures adopted by the Government will come out in the next 10 days, according to the Minister, therefore it is our recommendation to wait for the official legal acts regulating these measures before the final conclusions are reached.

According to the information provided, it is a package of assistance with an estimated value of EUR 5.1 billion, which represents about 11% of the GDP of the Republic of Serbia, or about half of the annual budget.

The published set of measures can be divided into four groups:

  • Tax policy measures
  • Direct assistance to the private sector
  • Measures to preserve liquidity
  • Direct assistance to all adult citizens


The Minister of Finance has stated that it is approved to defer payment of the following tax liabilities:

  • Postponing the payment of payroll taxes and contributions to the private sector during a state of emergency (at least 3 months). Late payment of tax liabilities may commence at the earliest in January 2021. Taxpayers will be able to repay at least 24 monthly installments
  • Delaying the payment of the profit tax advance in the second quarter of 2020 for all companies

In order to encourage donations, donors will be exempt from VAT.


As for direct assistance to the private sector, direct assistance measures are intended for businesses of all sizes:

  • Entrepreneurs (both flat-rate and real income tax payers), micro, small and medium-sized enterprises are provided with three months of three-month minimum wage support during a state of emergency
  • Assistance to the amount of 50% of the net minimum wage for employees is provided for large private enterprises which have been terminated by a decision in accordance with Articles 116 and 117 of the Labor Law

Please note that this program will not apply to the following businesses:

  • Business entities that reduced their staff by more than 10% before declaring a state of emergency. Please note that the aforementioned reduction in the number of employees does not include part-time employees whose contract expires during a state of emergency.
  • Business entities that have temporarily discontinued operations prior to the declaration of a state of emergency, i.e before 15.03.2020.


The Ministry of Finance has also published programs of incentive sources of financing:

  • Financial support program for micro, small and medium-sized enterprises, agricultural holdings and cooperatives: loans from the Development Fund to the amount of EUR 200 million
  • Guarantee schemes for loans from commercial banks for maintaining liquidity and current assets for micro, small and medium-sized enterprises and farms


The Minister of Finance stated that upon the abolition of the state of emergency, every adult citizen will receive EUR 100 in RSD equivalent.


As for the measures themselves, we would first like to note that the subsidies to the economy (what the economy will receive in grants) will amount to around EUR 815 million, not EUR 5.1 billion as presented. The rest of the funds, not counting the assistance to the citizens, the economy will be obliged to return to the state and banks. If we take into account the effect of corporate income tax, since government subsidies will represent the income of business entities, net support to the economy will be less than EUR 700 million.

When it comes to justification of the measures themselves, we believe that the measures should cover only the sectors affected by the crisis and not linearly all business entities. However, the question arises of the possibility of identifying and quantifying the impact of the crisis, i.e. avoiding arbitrariness in that case, so that we can say that the above solution is acceptable.

Given that most measures relate to, or shortly after, a state of emergency, depending on how long it will last, the question arises, “What next?”, Given that the greatest effects of the crisis are expected in months and years that follow.

Although not related to the economy, we must note that measures of indiscriminate direct assistance to citizens do not have any economic logic. If it is difficult for business entities to identify and quantify the impact of the crisis, clear criteria can be set here. Economically and socially justifiable measures would be to support certain categories of population who would use the money for consumption.

Our advice for business entities is to wait for a regulation to be made before making any projections or making decisions regarding the proposed measures.


On March 17, 2020, the National Bank of Serbia issued Decisions allowing loan / lease beneficiaries to defer payment of their liabilities to banks / leasing companies. Payment is deferred for a period of at least 90 days, that is, during the state of emergency. Banks and leasing companies can offer their clients other benefits in terms of repaying their liabilities.

During a state of emergency, the bank / leasing company does not charge interest on arrears and does not initiate the enforcement procedure against the debtor, that is, does not take other legal actions in order to collect the receivables from the debtor.

Banks and leasing companies were required to publish by March 21, 2020, on their website an offer for a delay in repayment of liabilities. If the debtor does not reject the offer within 10 days from the date of publication of the offer, (by 31 March 2020) he shall be deemed to have accepted the offer. If, on the other hand, the debtor wishes to continue repaying the loan, he must notify the bank or the leasing company in writing.

In practice, several concerns have arisen regarding the application of the aforementioned Decisions (whether the debtor will be able to inform the bank / leasing company before the expiry of the 10-day deadline, or whether will he have to wait for the expiry of the said deadline, or after the expiry of the deadline specified in the offer of power may he subsequently seek a delay, or will he be able to seek a continuation of payment of the debt if he has already required a delay).

What is certain and not explicitly stated in the decision of the NBS, however, it is clear from the offers of banks / leasing companies that banks / leasing companies will charge regular interest on the balance of debt during the standstill period, which they will attribute to the principal after the end of the standstill period, and charge in the remaining loan repayment period.

Before deciding whether you want to defer repayment or not, contact your bank / leasing company to calculate your debt increase on this basis. Depending on the amount of debt, the amounts can be significant, so if you have liquid assets, this option is not worth it at all.


At the end of third week of March, the Government of the Republic of Serbia also adopted the first Decree defining measures that should facilitate the position of taxpayers during the state of emergency.

The first measure concerns taxpayers who have been previously deferred from paying taxes in accordance with the Law on Tax Procedure and Tax Administration. These payers will not have to settle their liabilities during a state of emergency, starting with the installment due in March 2020. On the other hand, during the state of emergency, the Tax Administration will not annul the agreement, i.e. terminate the decision on the postponement of payment of the tax due and will not carry out enforcement procedure, and in that period it will not charge interest.

The second measure stipulates that the amount of tax paid and other payments, except interest, is calculated and paid interest at a rate equal to the annual reference rate of the National Bank of Serbia, which is currently 1.75%. Please note that under regular conditions in accordance with the Law on Tax Procedure and Tax Administration, this rate would currently amount to 11.75%.

The Decree does not, however, define whether a taxpayer who files a tax return and does not pay tax may be subject to a charge for non-payment of tax, as defined in Article 177 of the Law on Tax Procedure and Tax Administration.

In addition to the measures adopted, it should be noted that taxpayers may use two ordinary instruments provided for by tax laws to reduce their tax burden in the period of impaired business activity:

  • Taxpayers may, in accordance with the Law on Tax Procedure and Tax Administration, request the postponement of payment of a debt tax if they meet the conditions prescribed by law
  • In accordance with the Law on Corporate Income Tax and the Law on Personal Income Tax, if in the current tax period there are significant changes in business, tax instruments or other circumstances that significantly affect the amount of monthly advance tax, legal entities and entrepreneurs who keep business records may file a tax return in which they will calculate a new advance amount.

On our website we will continue to publish the latest news on economic and tax incentives during the period of the state of emergency. For more information on the economic measures program and how to qualify for incentives, please contact our consulting team.

Corona virus: Government tax and financial measures

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