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Program of Economic Measures

2022-07-01 • Nikola Gagić

On 31st March 2020, the Ministry of Finance of the Republic of Serbia, in cooperation with the Serbian Chamber of Commerce, presented a proposal for a program of economic measures to mitigate the negative effects caused by the Covid-19 pandemic and support the Serbian economy.

The set of economic measures includes a total of nine measures, that can be divided into four units, with an estimated effect of RSD 608.3 billion.

Since the aim of economic measures is to maintain the employment rate during the state of emergency, as well as to assist companies that have difficulty in doing business during the state of emergency, the measures do not apply to companies that are:

  • reduce the number of employees by more than 10% during a state of emergency (not counting part-time employees whose contract expires during a state of emergency)
  • suspended business before the declaration of emergency, i.e. before 15th March 2020

The first set of measures

The first set of measures is to delay the payment of taxes and contributions:

  • Delaying the payment of payroll taxes and to the private sector, during a state of emergency, with a subsequent repayment of tax obligations in installments beginning at the earliest from 2021.

    This measure is intended to increase the liquidity of all companies that pay salaries to employees. Also, this measure relates to deferring the payment of income tax on the self-employed activities of all entrepreneurs.

    The increase in liquidity is reflected in the deferral of payment of personal income tax and contributions on employees. All employers who choose to use this measure can apply deferral of personal income tax and contributions on employees until the beginning of 2021, and thereafter leave the possibility of deferring these costs for up to 24 months without the obligation to pay interest at the taxpayer's request.

  • Delaying the payment of income tax advances in the second quarter.

    The measure aims to increase taxpayers' liquidity by delaying the payment of income tax advance payments for 2020 due in the second quarter of 2020.

  • Exemption of donors from the obligation to pay VAT.

    The main objective of this measure is to exempt from VAT those donors who donate their products to institutions directly involved in activities aimed at preventing the spread and treatment of citizens from the COVID-19 virus.

The second set of measures

The second set of measures relates to direct payments to companies in the form of payment of minimum wage support for entrepreneurs, micro, small and medium-sized enterprises, and subsidies of 50% of the minimum wage to large companies whose employees are sent on forced vacation due to reduced business volume or complete shutdowns.

  • Flat-rate entrepreneurs and other micro, small and medium-sized companies in the private sector are provided with direct assistance in the form of a minimum wage payment (during a state of emergency).

  • Large companies are provided with the subsidy of 50% of the minimum wage payment for employees who have been terminated by company decision in the case of interruption of work in accordance with Articles 116 and 117 of the Labor Law (Official Gazette of the RS, No. 24/2005, 61/2005, 54/2009, 32/2013, 75/2014, 13/2017, 113/2017 and 95/2018).

This set of measures made a difference based on the economic strength of the company. It started from the assumption that companies classified as large companies have significantly greater economic power than entrepreneurs, micro, small and medium-sized companies. In accordance with the above, entrepreneurs, micro, small and medium-sized companies are provided with the economic assistance in the amount of net minimum wage for each person who has employee status.

The third set of measures

The aim of the third set of measures is to preserve the liquidity of companies in the conditions of economic crisis expected during and after the end of the state emergency caused by the COVID-19 virus pandemic.

With this program, the Government of the Republic of Serbia wants to minimize the external influences related to the fall in demand, interruption of supply chains and their consequences, such as reduced employment and illiquidity on the business of the Serbian economy.

The program envisages two measures:

  • program for granting loans for maintaining liquidity and working capital for companies in the segment of entrepreneurs, micro, small and medium-sized economic entities, agricultural holdings and cooperatives, which are registered in the relevant register, through the Development Fund of the Republic of Serbia
  • guarantee schemes for supporting the economy in the conditions of COVID-19 crisis for loans for maintaining liquidity and working capital for companies in the segment of entrepreneurs, micro, small and medium-sized economic entities, as well as agricultural holdings, through commercial banks operating in the Republic of Serbia

The fourth set of measures

The fourth set of measures relates to the payment of direct assistance in the amount of EUR 100 in RSD equivalent to all adult citizens of the Republic of Serbia.

With all of the above in mind, in the coming days we will have to wait for the adoption of the final program of economic measures.

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