Grey book 9

Naled
grey book 9
Eliminating Administrative Barriers to Doing Business
in Serbia 2016/2017 - Recommendations

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© 2017 National Alliance for Local Economic Development (NALED)
30/VII Makedonska, 11000 Belgrade, Serbia
www.naled.rs
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Development (NALED) is entirely responsible for the contents of this publication, which does not necessarily reflect the views of USAID or the U.S. Government. This is to grant
permission for use, copying and distribution of the publication contents exclusively non for profit use and with adequate indicating of names, i.e. the copyright of NALED. The
analyses, interpretations and conclusions stated in this document do not necessarily reflect the views of NALED Managing or Executive Board representatives. All efforts have
been made to ensure reliability, accuracy and up-to-date character of information presented in this document. NALED does not accept any form of responsibility for potential
errors in the document, or any financial or different form of damage arising or related to the use of this document.
COPYRIGHT NOTICE
Izvršni odbor
NALED
Executive Board
NALED

5greybook9
contents
INTRODUCTION______________________________________________________________________________________________________________________ 8
ABOUT______________________________________________________________________________________________________________________________ 9
Grey Book - testimony of reforms________________________________________________________________________________________________ 10
1. MINISTRY OF FINANCE
1.1 Introduce electronic tax clearance certificate _____________________________________________________________________________ 14
1.2 Enact that an appeal shall postpone enforcement until finality of the tax-administrative decision______________________ 15
1.3 Enact instances when taxes and benefits shall be assessed and paid for working retirees_________________________________ 16
1.4 Enact that VAT shall be charged on the day the receivable from the buyer has been collected____________________________ 16
1.5 Standardize penal policy related to the Value Added Tax records__________________________________________________________ 17
1.6 Facilitate Value Added Tax record keeping ___________________________________________________________________________________ 18
1.7 Eliminate cash register tapes and simplify cash register operations_________________________________________________________ 19
1.8 Amend the method of VAT reduction for write-offs (spoilage, spillage, breakdowns and breakage)_______________________ 20
1.9 Reduce VAT rate for drug production intermediates________________________________________________________________________ 21
1.10 Enact shorter deadline for overpaid VAT refund ___________________________________________________________________________ 22
1.11 Eliminate mandatory notification from Article 51a, Paragraph 2 of the VAT Law or enact electronic notification______ 23
1.12 Permit use of 100% of tax credit for investments in fixed assets and no limitations in terms of deadline for this option____ 24
1.13 Streamline refund of overpaid corporate profit tax _______________________________________________________________________ 25
1.14 Align criteria for taxes and benefits paid by flat rate taxpayers____________________________________________________________ 26
1.15 Timely tax bills from the Tax Administration for flat rate taxpayers ______________________________________________________ 27
1.16 Accounting expenditures in compliance with the International Accounting Standards__________________________________ 28
1.17 Standardize penal policy of the Accounting Law___________________________________________________________________________ 29
1.18 Reduce wage taxes and benefits______________________________________________________________________________________________ 30
1.19 Streamline expropriation procedure________________________________________________________________________________________ 31
1.20 Introduce control of public service fees and charges compliance with the public service cost setting methodology__ 32
1.21 Establish public register of non-tax charges and regulate fees for use of public goods__________________________________ 33
1.22 Eliminate republic administrative fee for applications to the Cadastral Office____________________________________________ 34
1.23 Streamline temporary admission____________________________________________________________________________________________ 35
1.24 Streamline express delivery procedures_____________________________________________________________________________________ 36
1.25 Enact procedure of business entity deletion from BRA registers___________________________________________________________ 37
1.26 Publishing the list of tax debtors___________________________________________________________________________________________ 38
1.27 Enact precise criteria for reporting concentration_______________________________________________________________________ 39
1.28 Alter inspection oversight practices applied in hospitality and other facilities___________________________________________ 40
1.29 VAT refund reciprocity between Serbia and other countries_______________________________________________________________ 41
1.30 Eliminate excise clearance certificate for international agreements _____________________________________________________ 42
1.31 Simplify the Ministry of Finance’s reporting procedures for compulsory stocks of crude oil and petroleum products_______ 43
1.32 Adapt compulsory annual asset and liability inventories to the needs of medium and large business entities____________ 44
1.33 Simplify collection of the withholding tax_________________________________________________________________________________ 45
1.34 Facilitate foreign trade operations by companies with state-owned capital______________________________________________ 46
1.35 Provide enough time for implementation of amendments to tax regulations if they impose significant operational
changes for business entities________________________________________________________________________________________________ 47
2. MINISTRY OF ECONOMY
2.1 Ex officio deletion from the register after the expiry of the time limit of 6 months _______________________________________ 48
2.2 Abolishing the compulsory membership fee of the Chamber of Commerce __________________________________________________ 49
2.3 Regulate the area of crafts by law___________________________________________________________________________________________ 50
2.4 Abolish regulatory requirements concerning the use of a stamp___________________________________________________________ 50
3. MINISTRY OF HEALTH
3.1 Abolish health care cards____________________________________________________________________________________________________ 51
3.2 Abolish certification of health care cards __________________________________________________________________________________ 52
3.3 Make the terms and conditions for paid sick leave due to injury at work and occupational rehabilitation
correspond to that due to other reasons __________________________________________________________________________________ 53

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contents
3.4 Simplify the procedure for claiming sick leave_______________________________________________________________________________ 54
3.5 Make private and public health care providers equally accessible__________________________________________________________ 55
3.6 Specify classes and categories of medical devices ___________________________________________________________________________ 56
3.7 Specify the statutory obligation of wholesale drug suppliers______________________________________________________________ 57
3.8 Specify qualifications required for pharmaceutical wholesalers___________________________________________________________ 58
3.9 Specify minimum space standards for business premises of wholesale drug suppliers_______________________________________ 59
3.10 Specify requirements for vehicles transporting medicines and medical devices___________________________________________ 60
3.11 Introduce the term: “nursing” into the Healthcare Law ___________________________________________________________________ 61
3.12 Introduction of a PVA system for a pragmatic assessment of a medicine when deciding whether to put it on the list ___ 62
4. MINISTRY OF LABOR, EMPLOYMENT, VETERAN AND SOCIAL POLICY
4.1 Streamline claiming maternity allowance ___________________________________________________________________________________ 63
4.2 Abolish compulsory filing of forms to the PIO Fund for registration of years of service__________________________________ 64
4.3 Introduce a seasonal employment electronic registration and record-keeping system____________________________________ 65
4.4 Enable employers to terminate employment contracts due to irreparable damage in employment relations_____________ 66
4.5 Amend statutory limitations concerning the Rulebook on Job Systematization____________________________________________ 67
5. MINISTRY OF CONSTRUCTION, TRANSPORTATION AND INFRASTRUCTURE
5.1 Shorten the permitting procedure and decrease costs______________________________________________________________________ 68
5.2 Specify the time limit for property registration with the Real Estate Cadastre _____________________________________________ 69
5.3 Enable entry of a preemptive right in the Real Estate Cadastre______________________________________________________________ 70
5.4 Enable leaseholders to register their short-term leases with the Real Estate Cadastre___________________________________ 71
5.5 Shorten the procedure for legalization of buildings_______________________________________________________________________ 72
5.6 Reduce limitations for engaging in taxi transport__________________________________________________________________________ 73
5.7 Regulate parafiscal charges collected in procedures for obtaining conditions and approvals for
construction and use of buildings___________________________________________________________________________________________ 74
5.8 Facilitate claiming the rights to the land needed for regular use of buildings____________________________________________ 75
5.9 Improve property registration_______________________________________________________________________________________________ 76
6. MINISTRY OF TRADE, TOURISM AND TELECOMMUNICATIONS
6.1 Abolish the obligation to keep KEPO book for legal entities that use double entry bookkeeping__________________________ 77
6.2 Abolish the obligation to file personal data for online advertising_______________________________________________________ 78
6.3 Provide technical solution for smooth application of the qualified digital certificate___________________________________ 79
7. MINISTRY OF PUBLIC ADMINISTRATION AND LOCAL GOVERNMENT
7.1 Implement reform of inspection services _____________________________________________________________________________________ 80
7.2 Introduction of complete and comprehensive civil servant evaluation procedure________________________________________ 81
8. MINISTRY OF MINING AND ENERGY
8.1 Amend current Power Purchase Agreement (PPA) for projects exceeding 5 mw _____________________________________________ 82
9. MINISTRY OF JUSTICE
9.1 Provide accessible court services by abolishing some court fees ___________________________________________________________ 83
9.2 Introduce a multilingual standard apostille form _________________________________________________________________________ 84
9.3 Abolish the obligation to file a request to access the case file where an applicant is the party to the proceedings ______ 84
10. MINISTRY OF AGRICULTURE AND ENVIRONMENTAL PROTECTION
10.1 Provide mechanism for issuance of certificate-registration marks for products with geographic origin _______________ 85
10.2 Abolish the obligation to pay fees for bee community health certificate__________________________________________________ 86
10.3 Ensure standardized policy regarding the rights of farmers to incentives - stockbreeders ______________________________ 87
10.4 Introduce extended responsibility in waste management for those products that after use
become special waste streams_______________________________________________________________________________________________ 88
10.5 Improve operations of the Directorate for Agrarian Payments____________________________________________________________ 89

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11. PROBLEMS UNDER THE PURVIEW OF SEVERAL MINISTRIES
11.1 Enact that during an inspection or tax control decisions and documents that produced subsequent decisions are not
required for review__________________________________________________________________________________________________________ 90
11.2 Abolish the obligation to acquire extracts from public registers and records for further administrative procedures______ 91
11.3 Simplify diet product import procedures ___________________________________________________________________________________ 92
11.4 Revise ministerial policy to charge high fees for providing an opinion and ensure timely issuance of opinions__________ 93
11. Simplify calculation of salaries_______________________________________________________________________________________________ 94
11.6 Prescribe and introduce the basic registers into the E-government system________________________________________________ 95
11.7 Make public property records more complete_______________________________________________________________________________ 96
11.8 Establish operational independence of the Commission for State Aid Control____________________________________________ 97
11.9 Establish a consolidated register of dog bite injury claims________________________________________________________________ 98
11.10 Enable acceptance of all qualified digital certificates by public administration’s applications and platforms_________ 99
11.11 Enable business entities to keep their business documents exclusively in electronic form_______________________________ 100
11.12 Build a regulatory framework and institutional capacities in the area of food safety
for easier production and trading in agricultural products___________________________________________________________ 101
12. NATIONAL ASSEMBLY AND SECRETARIAT FOR LEGISLATION
12.1 Allow marking of paragraphs to facilitate reading regulations_________________________________________________________ 102
13. NATIONAL BANK OF SERBIA
13.1 Abolish the obligation to report about international transactions_____________________________________________________ 103
13.2 Abolish compulsory use of a stamp on a specimen signature card when setting up a business bank account____________ 104
13.3 Notification to the National Bank of Serbia on intended assignment of receivables_____________________________________ 105
13.4 Supplying data on property rights of persons who are about to join the Managing or the Executive Board ____________ 106
14. LOCAL GOVERNMENT
14.1 Streamline permitting procedure for summer gardens in cafés and restaurants_________________________________________ 107
14.2 Exemption of lighted business signs placed within the framed title of the company seat
from the decision on advertising__________________________________________________________________________________________ 108
14.3 Amend decisions on the branding of parasols in restaurants_____________________________________________________________ 109
14.4 Charge natural persons and legal entities equal utility rates____________________________________________________________ 110
ANNEX 1: 2008-2016 GREY BOOK RECOMMENDATIONS________________________________________________________________________________ 112
ANNEX 2: GLOBAL COMPETITIVENESS LIST____________________________________________________________________________________________ 115
About NALED_____________________________________________________________________________________________________________________ 118
NALED MEMBERSHIP_______________________________________________________________________________________________________________ 120

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introduction
Dear members and partners,
We would like to bring to your attention the ninth issue of the Grey Book where we have identified 100 bureaucratic barriers to successful business
practices in Serbia. Each year with this document we offer clear guidelines for relevant institutions necessary to transform public administration into
an efficient citizen and business service and develop business enabling environment for domestic economy.
We enter new year with great expectations after successful 2016 initiatives supported by NALED members and partners and implementation of
important reforms aimed at strengthening competitiveness of Serbia – firstly, electronic building permitting system was launched, the system that has
revolutionized administrative processes, introduced full transparency of practices applied by line authorities, eliminated corruption opportunities and
condensed building permitting procedure which, on average, takes less than 10 days now. The World Bank has recognized this reform as one the 10
biggest in the world (116 positions improvement, current rank 36). This helped Serbia to rank among first 50 countries on ease of doing business
in conditions of global competition.
Apart from electronic permitting, improvements have been also made in the field of inspection oversight, cadastre registration of property right and
pre-emption right, criteria of concentration reporting, keeping sales and purchase ledger that was eliminated for legal entities subject to double-
entry bookkeeping system. However, we can’t be completely satisfied with what we see on the scoreboard considering that during the last year only
6 recommendations were completely resolved, 11 partially, and NALED members have identified 22 new bureaucratic barriers to doing business.
This is why with this Grey Book we ask from the Government to accelerate the speed of reforms related to elimination of unnecessary bureaucracy
and para-fiscal ballast carried by businesses, reduction of shadow economy and creation of fair and enabling conditions for market competition. As a
member of regulatory working groups, the Joint Group of the Government for Improvement of Serbia’s Rank on the Doing Business List created by
the World Bank, the Expert Group on Shadow Economy and the Economic Caucus of the National Assembly, NALED will further insist on creating
enabling and predictable business environment and contribute to implementation of reforms we advocate for.
We are grateful to our members for their recommendations for this year’s issue of the Grey Book – companies Geoart and Astra Zeneca, Law Office
Kosić, cities of Novi Sad, Pirot and Leskovac, municipalities of Aranđelovac and Srbobran, UVRA association and the Small and Medium Enterprises
and Entrepreneurs Association. We owe special thanks to USAID’s Business Enabling Project and the Executive Board of NALED for financial and
operational support in preparation and printing of the Grey Book 9.
Jelena Bojović
Policy Director, NALED

9greybook9
about
Grey Book is a regular annual publication identifying crucial administrative barriers to doing business in Serbia and giving specific recommendations
to the Government and relevant institutions to eliminate barriers. The ninth issue contains 100 selected recommendations of NALED members rela-
ted to red tape reduction and public sector efficiency improvements. Grey Book is the pivotal strategic document serving to institutions as a guideline
for regulatory reform planning and implementation.
22 of total 100 recommendations are new in this issue. This year again old recommendations were further processed or modified to the extent im-
posed by regulatory amendments, implemented reforms and business needs that occurred following the previous issue. Few of the solved, outdated
or less significant recommendations were left out. Since the first Grey Book in 2008, we have contributed to elimination or improvement of 80 bu-
reaucratic procedures that only created ballast for businesses. This means that the Serbian Government has been applying 10 NALED’s recommen-
dations per year on average.
No. Relevant Institution Total re-
commen-
dations
Problems
solved
Solved
partially
Unresol-
ved
New
recommen-
dations
1. Ministry of Finance 35 1 3 22 9
2. Ministry of Economy 4 0 1 2 1
3. Ministry of Health 12 0 3 8 1
4. Ministry of Labor, Employment, Veteran and Social Policy 5 0 1 4 0
5. Ministry of Construction, Transportation and Infrastructure 9 3 1 2 3
6. Ministry of Trade, Tourism and Telecommunications 3 1 1 0 1
7. Ministry of Public Administration and Local Government 2 1 0 0 1
8. Ministry of Mining and Energy 1 0 0 1 0
9. Ministry of Justice 3 0 0 3 0
10. Ministry of Agriculture and Environmental Protection 5 0 0 4 1
11. Several ministries 12 0 1 7 4
12. National Assembly and Secretariat for Legislation 1 0 0 1 0
13. National Bank of Serbia 4 0 0 4 0
14. Local Government 4 0 0 3 1
total 100 6 11 61 22
GREY BOOK 9: STATUS OVERVIEW, JANUARY 2017

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Comparing to theoretic discussions about how „public administration should be more efficient“, „labor burden lower“, and „para-fiscal dues fewer in
number“, the case of economic reforms appears to be simple. However, if you dig deep into everyday problems of businesses and public administra-
tion, you can find formulations such as „enact instances when taxes and benefits shall be assessed and paid for working retirees“, „eliminate excise
clearance certificate for international agreements“, „eliminate mandatory use of stamp on the specimen signature card for accounts opened by legal
entities“. When reforms are shaped and big plans get broken down to a series of small important steps leading to the final goal, cameras are turned
off and audience leaves, authorities and businesses are left to negotiate measures that are sometimes demanding for implementation or controversial,
and require good will, readiness for compromise and mutual respect and understanding.
In words understandable both to those interested in problems of the administrative ballast and those doing business in Serbia, it is easier to prescribe
that a business entity does not need to have a stamp than to ensure that it really can do business without a stamp. However, there is still a strong
reason to work on the problems identified in the Grey Book – leaving them unresolved will generate hundreds of millions of Euros in annual costs,
and we talk here only about direct costs. Negative consequences on competitiveness of our economy are not accounted for.
In this ninth year also, NALED’s Grey Book has been persistently and consistently analyzing, recommending and warning. Grey Book has analyzed
problems that are frequently under the radar of public administration and public in general, provided recommendations for overcoming problems,
warned of problems left unresolved too long and those situations when while some are being resolved other re-emerge on the other side. However,
some of recently implemented measures have solved major problems business were facing – for example, building permitting and cadastre registration
of rights to real-estate were streamlined, keeping sales and purchase ledger by legal entities subject to double-entry bookkeeping system was elimina-
ted. USAID BEP is pleased for being able to provide significant contribution to implementation of aforementioned measures.
We hope that the number of implemented measures will grow in 2017 and that the measurement of the administrative burden carried by the Serbi-
an businesses (results will be announced by the Republic Secretariat for Public Policy in autumn) will prove that seemingly small steps lead to major
savings in time and money. We hope that this will be the year when we the stamp will become history.
How businessmen see business environment and what they say about implemented reforms (and those that are not)?
The best source of answers to these questions is the Business Survey of 1000 companies published (for six years in a row) in October 2016 by USAID
BEP. Results of the latest survey show that business environment was significantly improved relative to both 2011 and 2013. In majority of areas
subject to survey either mild improvements or relative stagnation were identified.
The survey shows that 16 percent of those polled believe the burden of laws and regulations has gone down over the past 12 months, while another
38 percent partially agree with this statement (a total of 54 percent of all respondents). While these findings are similar to those seen last year, they
constitute a marked improvement on 2011, when as many as 82 percent did not agree that the burden of laws and regulations had been reduced in
the preceding 12 months (this year the figure is nearly twice as low, at 45 percent).
GREY BOOK – TESTIMONY OF REFORMS
The burden
of laws and
regulations
decreased in
the last 12
months
82 16 2
72271
73063
173746
153946
163945
Disagree (1+2) Partially agree Agree (4+5)
2011
2012
2013
2014
2015
2016
According to the findings of the Third Administrative Cost Measurement Study – Serbia published by USAID’s Business Enabling Project (USAID
BEP) in 2015, administrative cost of doing business in 2014 were worth 135 billion RSD, or 3.46% of GDP. In real terms, subject costs are 15%
lower vs. 2010, or by around 20 billion RSD. Usual EU target is to reduce administrative burden by 25% vs. baseline/start of reforms.

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Findings of all surveys from 2011 reveal a continuing decline in the burden of regulatory requirements (spending time and money on compliance).
In 2011, 56 percent stated they were spending more time and money on compliance than they did in the previous year in 2015 the figure was 25
percent, and 2016 has seen a decrease by an additional percentage point.
Major improvements have been recorded in a number of areas comparing to the previous year, such as progress in inspection oversight and construc-
tion permitting, reflected both in the perception and assessment of Serbia’s businesses. This year, 81 percent of businesses claim inspectors are well
trained, a major increase on last year’s 73 percent and 37 percent recorded in 2011; 72 percent of all respondents feel inspection legislation is easily
available and clear, as opposed to 67 percent seen in 2015 and 28 percent in 2011. The average time spent by a firm’s management on dealing
with inspections has continued to decline, falling from 12 hours per inspection visit in 2011 to four hours in 2016. The time needed to obtain a
construction permit has fallen from 9.3 months in 2013 and 7.7 months in 2015 to 4 months this year. In 2016, 40 percent of those polled believe
that costs involved in obtaining construction permits are reasonable, compared to 24 percent last year and 16 percent in 2013.
Some deterioration is visible only when it comes to the burden of court procedures, seen as negative by 47 percent of businesses this year as opposed to
43 in both 2015 and 2011. Additional negative perception is also in the area of enforcement of contracts, which, after seeing a major improvement
in 2015, declined by ten percentage points: 45 percent of those polled last year rated the enforcement system as “excellent” or “very good”, while
this year the figure stood at 35 percent. This area did improve since 2011, when as few as 15 percent of all respondents had rated the enforcement
system positively.
Of all the elements of the regulatory framework in Serbia, para-fiscal fees and charges are still seen as having the most detrimental effect, with 68
percent of all respondents awarding those poor scores. Aspects of the regulatory framework most consistently seen by businesses as negative include
wage taxes and contributions, value added tax, tax administration, the shadow economy, and administrative procedures. However, in 2016 busine-
sses rated all of these areas as being less damaging than before, particularly with major improvements seen in tax administration and administrative
procedures (51% and 53% negative this year vs. 59% negative responses for subject areas in 2015). This is another confirmation of the findings
from the Grey Book Things are moving ahead, but probably not fast enough.
Access to finance for MSMEs remains highly constrained. Borrowing by businesses is on the decline: as many as 68 percent claimed they did not
borrow or use other external finance, up from 62 percent in 2015 and 31 percent in 2011. This percentage in medium developed EU countries does
not exceed 30%. This is not good news. Without external financing, businesses are almost impossible to transform from micro and small enterprises
to medium and large enterprises.
– Para-fiscal fees and charges
– Wage taxes and contributions
– Customs and external trade
procedures
– Payment transactions
– Bank collateral requirements
– Awareness of regulatory changes
– Public administration
– Tax administration
– Time and money spent on
administrative procedures
– VAT collection procedure
– Enforcement procedure
– Inspection oversight
– Obtaining construction permits
– Corruption in public administration
– Transparency and predictability
– Obtaining various permits
and licences
– Inflation
– Exchange rate volatility
– Interest rate volatility
– Customs duties
– VAT rates
– Public procurement
– Use of external finance
– Bank lending
– Excise taxes
– Asset price volatiliy
– Credit demand
Progress of reforms, 2011-2016.
Significant improvement Some improvement No improvement Worse

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According to businesses, the top recently implemented reforms were: the Central Registry of Mandatory Social Insurance, simplification of KEPU
ledger procedures, abolition of employment booklets, and introduction of electronic construction permits. The most desirable reforms for the coming
year include tax cuts, streamlining para-fiscal fees and charges, more effective and efficient administration, and e-government.
What can we expect in the following year?
When asked about their perceived outlook for the coming 12 months, 31 percent responded that they expected to hire new staff: this is an increase of
7 percentage points from last year, and also constitutes the greatest year-on-year growth in this figure (from 24 percent of all respondents in 2015)
since the USAID BEP Business Survey was first performed.
Note that only in 2011 we had such a high percentage of businesses expecting to hire new staff in the following year, but in 2012 we experienced
job loss (around 1.1%) and GDP drop (around 1%). On the other hand, since the first business survey in 2011, we have never had less businesses
expecting job loss in the following 12 months: only 6%, one-third less than in previous year and three-fifths less than in 2012.
What can we expect from further improvements?
When asked about their hopes for the regulatory environment, businesses clearly prioritize tax cuts and reductions in contributions and charges (as
reported by 24 percent of those polled, in clear contrast with 2014, when just 17 percent had cited this issue), followed at a distance by more efficient
administration and e-government (7 percent). We would say that key recommendations from NALED’s Grey Book and USAID BEP Business Survey
are, if not completely concurrent, than definitely compatible:
— Intensify public administration reforms and enhance e-Government solutions
— Increase the predictability and transparency of the business environment
— Focus on tackling the shadow economy and full implementation of inspection reform
— Remove or reduce para-fiscal charges and ensure predictability of non-tax charges and fees
— Develop the regulatory framework for the non-banking financial sector aimed at improving access to finance for small and medium enterprises
— Restructure state aid to increase finance for MSME
— Improve loan enforcement and cut costs of regulatory requirements
— Provide businesses with training and education on financial management
— Increase and improve investments in infrastructure
— Increase communications about improvements in the business environment.
USAID BEP Team Belgrade, January 24, 2017
Number of
employees
11 58 31
196615
206812
266410
24679
31636
Decrease No change Increase
2011
2012
2013
2014
2015
2016

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10 KEY RECOMMENDATIONS OF THE GREY BOOK 9
No. Description Ministry in charge
1.1 Introduce electronic tax clearance certificate Ministry of Finance
1.6 Facilitate value added tax record keeping Ministry of Finance
1.14 Align criteria for taxes and benefits paid by flat rate taxpayers Ministry of Finance
1.18
Reduce wage taxes and benefits for lowest wages and introduce
more progressivity in taxation
Ministry of Finance
1.21
Establish public register of non-tax charges and regulate fees for
use of public goods
Ministry of Finance
2.3 Regulate the area of crafts by law Ministry of Economy
4.1 Streamline claiming maternity allowance
Ministry of Labor, Employment,
Veteran and Social Policy
4.3
Introduce seasonal employment electronic registration and
record-keeping system
Ministry of Labor, Employment,
Veteran and Social Policy
11.6
Prescribe and introduce the basic registers in the e-government
system
Several ministries
11.11
Enable business entities to keep their business documents exclusively
in electronic form
Several ministries

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1.1 INTRODUCE ELECTRONIC TAX CLEARANCE CERTIFICATE
PROBLEM DESCRIPTION SOLUTION-RECOMMENDATION
When a taxpayer has to provide a tax clearance certificate to
exercise his/her rights (tender participation, notarization of
health insurance cards, visa application and alike), he/she
must go to the tax office personally to take the application
form, fill out the form, pay the fee (which is different from
one tax office to another), settle different tax records in case
of existing liabilities, pay the difference for mature liabilities
(if any), and then, once again, go to pick up the tax clea-
rance certificate“. Subject problem can be easily solved by
electronic means – control of tax liabilities, application for
and pick up of the certificate.
Tax Administration’s servants apply 15 day deadline when
receiving applications for subject certificate, which is the fi-
nal deadline for issuance of certificates from records, accor-
ding to Article 161, Paragraph 3 of the Law on General Ad-
ministrative Procedure, even though that specific provision
has also prescribed that certificate shall be issued to the
applicant upon verbal request, by default on the same day.
Application of the subject law as regards to tax procedure
has been set in Article 3, Paragraph 2 of the Law on Tax Pro-
cedure and Tax Administration. Such practice complicates
business dealings and encourages corruption.
Another additional problem is errors by the Tax
Administration’s servants related to payrolls and taxes and
benefits statements. Statements are delivered after each
payment through applicable forms at the counters of tax
offices. In case of an error by the Tax Administration’s ser-
vants during delivered statement data entry to tax records,
error correction would require disproportional work load
and time (request for listing of tax cards, fee for listing of
tax cards, pick up of the card, comparing card status with
taxpayer records and in case of inconsistency, request for ali-
gnment with relevant documents).
Tax Administration should create conditions for issuance of
electronic tax clearance certificate free of any fees or charges.
Until the electronic procedure has been fully set up, hereby
we recommend to the Tax Administration to use own inter-
nal acts to regulate the procedure of tax clearance certificate
issuance immediately upon receiving the application, all with
regard to the fact that status control for tax liabilities can
be conducted by means of simple status queries in the Tax
Administration’s information technology system.
The whole problem of data entry errors and other technical
errors can be solved by introduction of e-government so-
lutions and electronic application. This would eliminate the
step of application submission at the counter of the Tax Ad-
ministration as regards to taxes and benefits payments for
employees. In addition to less administration for employers,
potential effects are far more efficient and cost effective ope-
rations of the Tax Administration, as well as elimination of
potential corruption opportunities.
Tax Administration is still developing the e-Taxes portal in
an attempt to make it completely operational. Plan for the
portal is to offer fast, simple and streamlined tax repor-
ting. Completely operational portal will offer, among other,
electronic reporting through the portal, printing reports and
notifications on submitted reports, search and view tax re-
ports submitted through the portal or in hard copy form at
the counter, and status reports for tax payer accounts.
REGULATIONS
• Law on Tax Procedure and Tax Administration (Official Gazette of RS 80/02, 84/02, 23/02, 70/03, 55/04, 61/05, 85/05, 62/06,
61/07, 20/09, 53/10, 101/11, 2/12, 93/12, 47/13, 108/13, 68/14, 105/14, 91/15, 112/15 and 15/16)

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1.2 ENACT THAT AN APPEAL SHALL POSTPONE ENFORCEMENT UNTIL FINALITY OF THE TAX-ADMINISTRATIVE DECISION
Article 147 of the Law on Tax Procedure and Tax Admini-
stration set that an appeal shall not postpone enforcement
of the tax-administrative decision. Subject provision crea-
tes problems for taxpayers in practice, especially in view of
the deadline taken by line institutions to process the appeal.
Even though legal deadline for processing appeals is 60 days,
appeal procedures in practice take much more time. During
that period, tax administration is authorized to use regular
procedure to collect taxpayer’s liabilities related to public re-
venues from the taxpayer’s accounts. Even when the decision
has been revoked, taxpayer’s monies are refunded with sub-
stantial delay and no prescribed interest on arrears.
Undoubtedly, this legal solution creates situations where
taxpayers’ accounts are frozen and business dealings are
difficult, and the final result may even be the receivership. In
practice, this problem has not been resolved by means of the
discretionary judgment of the Tax Administration from Ar-
ticle 147, Paragraph 2 of the Law to postpone enforcement
if the taxpayer has provided documented evidence that tax
payment before finality of contested decision would inflict
significant economic damage to him/her.
We have received a comment from the Ministry of Finance
saying that Article 147, Paragraph 2 of the Law set an op-
tion for suspensive effect of an appeal, if the taxpayer has
provided documented evidence that tax or secondary duty
payment before finality of contested decision would inflict
significant economic damage to him/her. This is correct, but
the case here is about exception completely depending on
discretionary judgment of the Tax Administration, creating
legal uncertainty for taxpayers as regards to the possibility
and time of refund of groundless tax collection.
Amend Article 147 of the Law on Tax Procedure and Tax
Administration by enacting that an appeal shall postpone
enforcement until finality of the tax-administrative decision.
If the Ministry of Finance finds that accepting such re-
commendation can potentially undermine the RS budget,
than we would recommend protection for taxpayer rights by
adding new Paragraphs 5 and 6 after Paragraph 4 of the Ar-
ticle 147 of the Law, to read:
„If the second instance body has not made the decision by
the deadline from Paragraph 4 of present article, the first in-
stance body shall make forthwith decision on re-enforcement
and conduct refund of collected amount to the taxpayer,
with interest on arrears as per Article 75 of present Law.
In case of the situation from Paragraph 5 of present article,
if the tax-administrative decision has subsequently entered
in force, interest on principal debt shall be charged as of the
day of finality of the subject decision.“
REGULATIONS
• Article 147 of the Law on Tax Procedure and Tax Administration (Official Gazette of RS 80/02, 84/02, 23/02, 70/03, 55/04, 61/05,
85/05, 62/06, 61/07, 20/09, 53/10, 101/11, 2/12, 93/12, 47/13, 108/13, 68/14, 105/14, 91/15, 112/15 and 15/16)

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1.3 ENACT INSTANCES WHEN TAXES AND BENEFITS SHALL BE ASSESSED AND PAID FOR WORKING RETIREES
1.4 ENACT THAT VAT SHALL BE CHARGED ON THE DAY THE RECEIVABLE FROM THE BUYER HAS BEEN COLLECTED
PROBLEM DESCRIPTION
PROBLEM DESCRIPTION
SOLUTION-RECOMMENDATION
SOLUTION-RECOMMENDATION
Various interpretations of compulsory tax and benefits
payments for retirees who have re-established employment re-
lationship may be found in practice, as well as when they regi-
ster entrepreneurial business or start up a business entity.
According to some interpretations, health care insurance and
unemployment insurance contributions should not be paid for
retirees, while some other say that they should be paid.
Subject dilemmas should be solved though amendments to appli-
cable regulations. Otherwise, such legal gap will create further
legal uncertainty as regards to statutory conduct in this matter.
According to the Value Added Tax Law, the VAT onset is on
the day when goods and services are sold, regardless of when
the actual payment will occur. Due to the obligatory calcu-
lation of VAT on the day when goods and services are sold,
taxpayers often owe VAT payment for goods for which they
themselves haven’t been paid yet. On the other hand, if go-
ods were paid in advance, the Law imposes the obligation to
calculate VAT on the day of payment. It is obvious that sta-
ted solutions do not consider the needs of businesses, which
is how discouraging the effects of the rules about the onset
of the obligation regarding the turnover of goods and servi-
ces can be.
Amend the Law on Mandatory Social Security Insurance
Contribution by providing clear prescription of instances
when taxes and benefits shall be assessed and paid for wor-
king retirees.
Consider amendment to Article 16 of the Value Added Tax Law
in terms of specifying the onset of the tax obligation on the day
when the sales revenues are actually collected rather than on
the day when the turnover of goods and services occurred.
We have received commentary from the Ministry of Finan-
ce indicating that such recommendation would prejudice the
EU acquis in the sphere of sale taxation, i.e. Council Directive
2006/112/EC, but NALED will keep this recommendation con-
sidering the fact that the Directive prescribed an option, not an
obligation, to collect VAT before receivables are collected.
REGULATIONS
REGULATIONS
• Law on Mandatory Social Security Insurance Contribution (Official Gazette of RS 84/04, 61/05, 62/06, 5/09, 52/11, 101/11, 47/13,
108/13, 57/14 and 112/15)
• Article 16 of the Value Added Tax Law (Official Gazette of RS 84/04, 86/04, 61/05, 61/07, 93/12, 108/13, 6/14 and 68/14 and
83/15)

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1.5 STANDARDIZE PENAL POLICY RELATED TO THE VALUE ADDED TAX RECORDS
Article 42 of the Value Added Tax Law prescribed com-
pulsory data on bills/invoices, and/or other documents used
as bills, for all sales of goods and services. If the Tax Inspec-
tion has identified lack of required data on any of the bills,
it shall dispute stated tax charge and impose sanctions as
prescribed. Entity in charge of control does not even provide
a deadline for the taxpayer to obtain corrected bill with all
required data pieces. In practice this is about unintentional
errors, that is, omissions that carry no negative effects on
collection of tax liabilities.
In case of taxpayers with numerous supplier bills, even tho-
ugh early control and timely business ledger practices have
been applied, it may happen in practice that previous VAT is
charged on the basis of a document that does not contain all
required data.
Align practices of the Tax Inspection by providing VAT payers
with an additional deadline of five working days to obtain
bills with all required data of the bill issuer in those instances
when errors in the records have been identified (meaning that
records contain bills/invoices that lack all required data).
REGULATIONS
• Article 42, 46 and 60 of the Value Added Tax Law (Official Gazette of RS 84/04, 86/04, 61/05, 61/07, 93/12, 108/13, 6/14, 68/14 and 83/15)
• Rulebook on VAT Form, Contents and Record Keeping (Official Gazette of RS 120/12).

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1.6 FACILITATE VALUE ADDED TAX RECORD KEEPING
Adoption of the new Rulebook on VAT Form, Contents and
Record Keeping, has additionally complicated VAT records.
Principal elements of VAT report (VAT charged, previous
VAT and payable amount) are identical, but new rules have
made document entry much more difficult.
New tax report provides purely statistical data that are of
no significance for VAT calculation, while on the other hand
they make VAT report control and generation more difficult.
Previously, each document would be entered only once in the
incoming invoice ledger or outgoing invoice ledger, which
was then used to produce tax report. After the amendments
to the Rulebook, some documents are to be entered seve-
ral times (for example, import invoices with sales within one
period and VAT payment within another period), which has
destroyed the original concept and complicated processing.
Calculation is much more difficult because, now, one should
process invoices with no impact on VAT that were not recor-
ded earlier (invoices that are not covered by VAT system and
alike). Special problems are various additions to the original
VAT calculation, such as internal VAT calculation in case
of secondary raw materials and software imports that now
spoil original principles of VAT entry.
New Rulebook on VAT Form, Contents and Record Keeping
and the Form and Contents of VAT Calculation was pro-
mulgated on September 30, 2016 (Official Gazette of RS
80/16), and it was supposed to enter into force on January
1, 2017, but application was postponed for January 1, 2018.
Anyway, subject Rulebook does not respond to the needs
of businesses for streamlined calculations. Instead, it makes
it even more complicated by inflating the scope of required
documents and reports.
Amend the Rulebook on VAT Form, Contents and Record
Keeping and the Form and Contents of VAT Calculation to
streamline VAT record keeping, i.e. by not making it more
complicated than it was according to the previous rulebook
related to this matter.
REGULATIONS
• Rulebook on VAT Form, Contents and Record Keeping (Official Gazette of RS 80/16, 109/2016)

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1.7 ELIMINATE CASH REGISTER TAPES AND SIMPLIFY CASH REGISTER OPERATIONS
Certain provisions of the Law on Fiscal Cash Registers (here-
inafter: Law) and associated Rulebook on the Procedure of
Fiscalization, Contents of Records of Licensed Service Shops
and Servicemen, and the Appearance, Contents and Method
of the Fiscal Cash Register File and Service Booklet Mainte-
nance (hereinafter: Rulebook) proved to be ineffective, thus,
making business operations more difficult and expensive.
Article 3, Paragraph 2 of the Law prescribed mandatory regi-
stering of each individual sale though the cash register, also
when the service is provided to the natural entity, and servi-
ce fee is to be paid by the legal entity, i.e. the entrepreneur,
irrespective of the payment method (cash, check, credit card
and cashless payments). Subject obligation is pointless since
data on service payment are registered in the books (bank
statement), and thus, there is no further need to register
twice the payments by natural entities for services rendered
(through bank statements and through cash register).
Printing of fiscal documents from Articles 12–15 of the Law
are to be on a single copy, accompanied with their full con-
tents on a fiscal cash register tape by means of copying or
double printing. Data printed on fiscal documents must
match data on the cash register tape. Taxpayer shall keep
the tape and fiscal documents from Articles 13 and 14 of
the Law at least three years, which is something that has no
reasonable justification.
Requirements of cash register fiscalization, servicing and re-
pair have been prescribed in Articles 27 and 28 of the Law.
Articles 12 – 14 of the Rulebook prescribed the procedure
of cash register fiscalization that is sluggish and costly for
business entities.
The following amendments and addenda to the Law and Ru-
lebook are required to achieve effectiveness and simplifica-
tion:
Eliminate compulsory printing of cash register tapes for fis-
cal receipts (fiscal documents according to Article 12 of the
Law). Until cash register tapes are eliminated, amend the ti-
me period of obligatory tape keeping to maximum one year.
Delete provision from Article 3, Paragraph 2 of the Law, be-
cause there is no need to register twice the same payment.
Registering through the cash register should exist only in ca-
se of service payment by natural entity in cash, as cash regi-
sters were introduced to register cash sales.
Shorten the deadline set in the Rulebook related to licensed
servicemen and tax entities.
REGULATIONS
• Law on Fiscal Cash Registers (Official Gazette of RS 135/04 and 93/12)
• Rulebook on the Procedure of Fiscalization, Contents of Records of Licensed Service Shops and Servicemen, and the Appearance, Contents
and Method of the Fiscal Cash Register File and Service Booklet Maintenance (Official Gazette of RS 140/04)

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1.8 AMEND THE METHOD OF VAT REDUCTION FOR WRITE-OFFS (SPOILAGE, SPILLAGE, BREAKDOWNS AND BREAKAGE)
The Regulation on the Amount of VAT-Free Write-Offs (spo-
ilage, spillage, breakdowns, breakage) prescribed that the
write-offs free of VAT are to be expressed as a percentage of
goods that were acquired, processed, produced or sold in a
particular period of time. The write-off amount is identified
through inventorying, which is a relatively complex and time
consuming process, especially for businesses and entrepre-
neurs with a wide assortment of products, produced or sold.
Article 3, Paragraph 1 of the Regulation prescribed that
the VAT payer shall identify the write-off immediately upon
occurrence, either through regular or extraordinary inven-
torying in the storage, warehouse, depot, shop or any other
similar facility.
Amend Article 3, Paragraph 1 of the Regulation on the
Amount of VAT-Free Write-Offs (spoilage, spillage, bre-
akdowns, breakage) to prescribe identification of write-offs
only on annual bases, according to annual inventory data,
if the taxpayer has decided to conduct subject calculation
on annual basis (taxpayer will inform the Tax Administration
about this decision).
Note that the state budget would benefit from this re-
commendation because taxpayers would pay their VAT liabi-
lities throughout the year, even for unusable goods that will
be written off at year end (budget crediting by taxpayers).
REGULATIONS
• Article 3, Paragraph 1 of the Regulation on the Amount of VAT-Free Write-Offs (spoilage, spillage, breakdowns, breakage)
(Official Gazette of RS 124/04)
According to FREN findings, VAT payers in Serbia currently con-
duct inventorying for the purpose of VAT reductions for spoilage,
spillage, breakdowns and breakage 2.7 times per year on average.
If they have been allowed to deduct the amount of deficit created
during the entire period since the previous inventorying, cost of in-
ventorying would be reduced by around 4.45 billion dinars (43.2
million Euros), in case of annual inventorying by VAT payers.

21greybook9
1.9 REDUCE VAT RATE FOR DRUG PRODUCTION INTERMEDIATES
According to Article 23, Paragraph 2, Item 3 of the Value Ad-
ded Tax Law, among other, drugs are subject to reduced VAT
rate of 10%. However, the Law has not envisaged preferential
treatment for drug intermediates used in production.
Subject regulation has adverse impact on domestic drug pro-
ducers because materials required for drug production are
subject to 20% general rate, thus, creating problems of sol-
vency for domestic producers due to significant tax amounts.
Particularly, due to compulsory payment of higher VAT rate
for material purchases and lower VAT rate payment for sold
finished products, taxpayer must request overpaid tax each
month - procedure imposing significant additional workload
for businesses.
Amend Article 23, Paragraph 2 of the Value Added Tax Law
by adding new Item 3 a) after Item 3) to read:
„3a) drug production intermediates and/or raw materials
used for drug production processes;“
This major problem of the domestic pharmaceutical industry
has been presented by Hemofarm a.d. Vršac. Even though
this law was amended three times since December 2013, the
Ministry of Finance did not respond positively to this reaso-
nable request presented by domestic pharmaceutical com-
panies.
REGULATIONS
• Article 23, Paragraph 2 of the Value Added Tax Law (Official Gazette of RS 84/04, 86/04, 61/05, 61/07, 93/12, 108/13,
6/14, 68/14, 83/15 and 5/16)

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1.10 ENACT SHORTER DEADLINE FOR OVERPAID VAT REFUND
Article 52, Paragraph 4 of the Value Added Tax Law specifies
that overpaid VAT presented in the tax form shall be retur-
ned to taxpayers who predominantly trade goods abroad,
within 15 days after the tax form was submitted, but not
later than within 45 days.
This time limit is unnecessarily long and it reduces the sol-
vency of the business.
Further problems occur due to lack of adequate risk analysis.
Instead of tax credit, majority of taxpayers opt for VAT re-
fund, which is determined by field control. This creates
another administrative barrier – extended refund period due
to obvious problem of shortage of tax inspectors.
Component number seven on „Taxes and Mandatory Con-
tributions“ of the World Bank’s annual Doing Business re-
port provided detailed analysis of 57 days period required
for overpaid VAT refund to a taxpayer, something that has
negative impact on Serbia’s ranking in this sphere.
Amend Article 52, Paragraph 4 of the Value Added Tax Law
by prescribing shorter deadline for VAT refund to taxpayers
who predominantly trade goods abroad. Recommended de-
adline is 5 days.
Recommended solution would improve liquidity of exporters
and reduce cost they pay for loan interests. This would serve
as an incentive for all exporters.
Comply with 45 day deadline for overpaid VAT refund. Su-
bject legal deadline is reasonable considering the fact that
subject period starts as of the day of expiration of the de-
adline for filing the tax report (for timely filled tax reports).
Analyze possibilities for automatic VAT refund to taxpayers
from the lowest risk category (example of the best practice
comes from the Republic of Croatia. Croatia has recently in-
troduced automatic VAT refund to taxpayers from the lowest
risk category).
REGULATIONS
• Article 52, Paragraph 4 of the Value Added Tax Law (Official Gazette of RS 84/04, 86/04, 61/05, 61/07, 93/12, 108/13, 6/14,
68/14, 83/15 and 5/16)

23greybook9
1.11 ELIMINATE MANDATORY NOTIFICATION FROM ARTICLE 51a, PARAGRAPH 2 OF THE VAT LAW OR ENACT ELECTRONIC
NOTIFICATION
Article 51a, Paragraph 2 of the Value Added Tax Law prescri-
bed that together with the tax return the payer shall file with
the tax authority, the information on:
− A person who is not registered for VAT payment obligation
in accordance with this Law, who had supplied him from
January 1 until the end of the last tax period of the calendar
year, or the last tax period in the Republic, with raw materi-
als and services that are directly related to those goods, as
well as on the value of that supply;
− A farmer who is not registered for VAT payment obligation
in accordance with this Law, who had supplied him from
January 1 until the end of the last tax period of the calen-
dar year, or the last tax period, with agricultural and forest
products and agricultural services, as well as on the value
of that supply.
Information under paragraph 2 of this Article shall at least
contain information on the business name, or first and last
name, as well as address and tax ID number of the person
referred to in Paragraph 2, Item 1), and Paragraph 2, Item 2)
of this Article, as well as on the value of the executed supply,
without corresponding obligations.
Subject provision is mandatory for companies involved
in manufacturing tobacco products. They must generate
month-end data on tobacco purchased from tobacco pro-
ducers that are not in VAT system for previous 12 months,
and that report is sent to the Tax Administration by mail.
Another problem is the situation in practice where certain
farmers may generate revenues that would qualify them for
VAT system or generate less revenue that would not qualify
them for VAT system during same 12 months. This procedu-
re is imposing huge workload for company staff if they have
to process data received; higher postage cost; no option to
control submitted data.
Review adequacy of this administrative barrier in terms of
data usefulness in the Tax Administration.
If this provision has no positive effects or budget benefits are
lower than expanses accompanying implementation of this
procedure by taxpayers, we recommend abrogation of Para-
graphs 2, 3 and 4 of Article 51a of the Law.
If analysis of effects of subject provisions provides evidence
that subject procedure is valid, than we would insist on the
following: either amend Article 51a of the Value Added Tax
Law to prescribe notification from Paragraph 2 to the Tax
Administration in electronic form, or provide instructions
imposing such procedure.
We believe that there are no obstacles for electronic notifica-
tions considering the fact that sending VAT reports is already
permitted for all taxpayers.
Law on Amendments and Addenda to the Value Added Tax
Law (Official Gazette of RS 83/15) amended Article 51a,
Paragraph 2 of the VAT Law which was the base of this re-
commendation. However, aforementioned amendments ha-
ve only expanded the scope of entities this obligation is rela-
ted to (no one million dinars monetary limit).
REGULATIONS
• Article 51a of the Value Added Tax Law (Official Gazette of RS 84/04, 86/04, 61/05, 61/07, 93/12, 108/13, 6/14, 68/14, 83/15 and
5/16)

24
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1.12 PERMIT USE OF 100% OF TAX CREDIT FOR INVESTMENTS IN FIXED ASSETS AND NO LIMITATIONS IN TERMS OF DEADLINE
FOR THIS OPTION
Before 2013 amendments, Article 48 of the Law on Corpo-
rate Profit Tax prescribed instances in which taxpayers can
be granted deductions from taxes for investments in fixed
assets. Subject deduction was limited in terms of quantity
and deadline:
1) taxpayer who invested in fixed assets within their own re-
gistered business activity shall be granted the right to tax
credit of 20% of the actual investment, provided that the
sum does not exceed 50% of the calculated tax for the year
of investment. Small businesses are granted the right to
tax credit of 40% of the actual investment, provided that
the sum does not exceed 70% of calculated tax;
2) after having calculated tax liabilities for corporate profit
tax, the taxpayer shall firstly use the tax credit on the gro-
unds of investments in fixed assets effectuated in the cu-
rrent year, and only thereafter tax credits aggregated from
previous years.
Our previous recommendations were highlighting the bene-
fits of elimination of such limitations, i.e. tax credit for inves-
tments in fixed assets for all legal entities and entrepreneurs
should be 100% of all investments in fixed assets without any
limitation as regards to tax liability. Also, taxpayer would be
entitled to use this deduction without any time limit.
Contrary to our recommendations, amendments to the Law
from December 2013 eliminated subject deduction and only
already numerous incentives for new investments have been
increased. Existing companies have been put in unfavorable
situation as compared to previous period. Such situation is
unsustainable and detrimental for majority of business be-
cause they are in bad position to endure competition from
new businesses that, in contrast to existing business, enjoy
numerous incentives, as well as competition from importers
buying goods from foreign producers enjoying subsidies of
their home countries.
For the purpose providing incentives for new investments,
amend the Law on Corporate Profit Tax to re-enact tax cre-
dit for investments in fixed assets, as follows:
1) tax credit for investments in fixed assets for all legal enti-
ties and entrepreneurs should be 100% of all investments
in fixed assets without any limitation as regards to tax lia-
bility;
2) taxpayer should be entitled to use tax credit for inves-
tments in fixed assets from previous years without any ti-
me limit, i.e. at least in the subsequent five years (common
deadline in comparative law). Alternatively, amend afore-
mentioned provisions to permit use of tax credit for in-
vestments in fixed assets in order of origination of the tax
credit entitlement.
Such solution would encourage taxpayers to make significant
investments in fixed assets and modernization of business
processes.
Amendments to the Law from December 2013 eliminated
tax incentives for existing businesses in terms of tax credits
for investments in fixed assets, and introduced incentives for
big investments. Therefore, businesses that are not in posi-
tion to make large investments and create new jobs in re-
latively short period have been put in unfavorable position,
before all, compared to new investors.
REGULATIONS
• Delete Article 48 of the Law on Corporate Profit Tax (Official Gazette of RS 25/01, 80/02, 43/03, 84/04, 18/10, 101/11, 119/12,
47/13, 108/13, 68/14, 142/14, 91/15 and 112/15)

25greybook9
1.13 STREAMLINE REFUND OF OVERPAID CORPORATE PROFIT TAX
When the tax balance of the corporate profit tax shows over-
payment, the Tax Administration refunds the diffe¬rence
only after their control and verification process. Someti¬mes
they ask to review the last five business years, although this
condition imposed on the taxpayer who filed the tax return
is not actually required by law. This is seen by businesses as
additional pressure to forego the refund of the difference in
paid taxes.
Different Tax Administration Offices should synchronize
their practices in order to allow legally permissible refund of
overpaid tax to taxpayers at their request and without any
additional requirements.
We think that the existing solution in the law is good, as
entitlement of the taxpayer to be refunded for overpaid pro-
fit tax payment upon application filed with the Tax Admini-
stration is clearly defined. However, given that first instan-
ce agencies often do not adequately adhere to this norm
in practice, we suggest passing a set of instructions by the
Tax Administration, approved by the Ministry of Finance, to
clearly bind all tax administration offices to the use of one
and same practice and to strictly follow the abovementio-
ned norm without imposing previous and additional requi-
rements on taxpayers, unless the risk analysis has produced
indications of inadequate conduct which makes the applica-
tion for refund of overpaid tax pointless.
REGULATIONS
• Delete Article 3 of the Law on Corporate Profit Tax (Official Gazette of RS 25/01, 80/02, 43/03, 84/04, 18/10, 101/11, 119/12,
47/13, 108/13, 68/14, 142/14, 91/15 and 112/15)

26
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1.14 ALIGN CRITERIA FOR TAXES AND BENEFITS PAID BY FLAT RATE TAXPAYERS
Prescribed tax base for income from self-employment/entre-
preneurs – flat rate taxation for taxes and compulsory social
insurance benefits, flat rate taxpayers – is the average gross
wage per employee on the territory of the Republic of Serbia,
piece of data that may be taken from the Statistics Office.
However, the tax base is then subject to reduction/increase
criteria that are differently interpreted and applied from one
tax office to another. Consequences are huge discrepancies
and illogicalities in final quantities paid by similar shops in
different cities and municipalities.
Certain criteria from Article 6 of the Regulation on Detai-
led Requirements, Criteria and Elements of Flat Rate Taxa-
tion for Income from Self-Employment/Entrepreneurs – for
example, other circumstances exerting impact on business
activities, market conditions for doing business or bu-
siness reputation of the entrepreneur are unclear and su-
bject to broad interpretation. From comparison of tax bills
from different local tax offices one may conclude that in so-
me developed cities with better living standards tax base is
often reduced, while in other cities with poor living standar-
ds, lower level of employment and poor infrastructure the tax
base is not reduced.
It is a paradox to see that the tax base is increased by 10%
for each new employee considering the fact that the entre-
preneur incurs additional costs for each new employee (wa-
ge, taxes and benefits). It is inadmissible to have criterion,
such as business reputation of the entrepreneur, resulting
in any, and definitely not a triple tax increase as set in Article
6, Paragraph 1, Item 7), Sub-Item 1 of the Regulation.
Subject practice is discouraging for entrepreneurship and job
creation, something that is completely opposite to declared
goals of the Government of RS.
Amend Regulation on Detailed Requirements, Criteria and
Elements of Flat Rate Taxation for Income from Self-Em-
ployment/Entrepreneurs by enacting clear criteria of flat rate
taxation based on economic strength of the taxpayer and in-
terpreted uniformly throughout the country.
Alternatively, precise instructions of the Tax Administration
could be used to overcome current problems in flat rate taxa-
tion practice, which is more than absurd.
Either way, a source of best practice that could be used to
adapt domestic regulation is the Instruction of the Ministry
of Finance, Tax Administration of the Republic of Croatia:
„Flat Rate Taxation of Self-Employment, Crafts, Agriculture
and Forestry“.
REGULATIONS
• Regulation on Detailed Requirements, Criteria and Elements of Flat Rate Taxation for Income from Self-Employment/Entrepreneurs
(Official Gazette of RS 65/01, 45/02, 47/02, 91/02, 23/03, 16/04, 76/04, 31/05, 25/13, 119/13 and 135/14)

27greybook9
1.15 TIMELY TAX BILLS FROM THE TAX ADMINISTRATION FOR FLAT RATE TAXPAYERS
Tax bills for taxes and benefits for entrepreneurs paying flat
rate taxes are late almost two years.
Majority of entrepreneurs pay their dues according to old tax
bills. Once new tax bills are issued, new amounts will proba-
bly exceed those currently paid through advance payments.
This will be an additional burden for entrepreneurs and their
businesses will become even more uncertain.
Problems are particularly difficult in case of entrepreneurs
that have changed their status during 2015 from flat rate
taxpayers to book keeping taxpayers and vice verse. Due to
difference in taxpayer status, payments of tax liabilities are
registered under new status, while tax debt are registered un-
der old status: overpaid amount is constantly growing for the
new taxpayer status, while the tax debt is constantly growing
for the previous taxpayer status, something that is subject to
interest on arrears and threat of enforcement.
Problems are particularly difficult in case of entrepreneurs
that have opened their shops during 2015. Such entreprene-
urs have not received tax bills and there is no debt, but when
they apply for tax certificate for their revenues they receive
certificate stating 0.00 dinars of revenues.
Law on Personal Income Tax should include deadline for Tax
Administration related to issuance of tax bills.
Alternatively, we recommend that local tax administration
should be responsible for tax bills considering the fact that
this is shared revenue.
REGULATIONS
• Law on Personal Income Tax (Official Gazette of RS 24/01, 80/02, 135/04, 62/06, 65/06, 31/09, 44/09, 18/10, 50/11, 91/11,
7/12, 93/12, 114/12, 8/13, 47/13, 108/13, 6/14, 57/14, 68/14, 5/15, 112/15 and 5/16
new

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1.16 ACCOUNTING EXPENDITURES IN COMPLIANCE WITH THE INTERNATIONAL ACCOUNTING STANDARDS
According to the Law on Corporate Profit Tax, provisions for
uncollectable accounts receivable are expenditures accoun-
ted for taxation purposes only if delayed more than 60 days
on December 31 of the fiscal year of account entry. Question
here is what happens when provisions for accounts receiva-
ble, considered by tax authorities as non-recognized expen-
ditures at that particular point in time, are due for payment
and meet all requirements of tax recognized expenditures at
some other time? Serbian Law on Corporate Profit Tax has
no response to such cases.
Due to different financial accounting regulations applied on
international financial markets and tax accounting regula-
tions applied in Serbia, major differences between entry of
financial revenues and taxable revenues may occur. Consi-
dering that financial accounting must show the most credi-
ble view of financial operations to external investors, the law
must ensure recognition of tax reliefs and liabilities to occur
in future years arising from accounting entries in current fis-
cal year, even though formal tax related revenue recognition
requirements have not been met.
Article 39 of the International Accounting Standards reads:
„(…) Provision for corrected value of accounts receivable
shall be set in case of objective evidence that business entity
will not be in position to collect amounts maturing as per
initial conditions of account receivable. Significant financial
difficulty of obligor, probability that the borrower will enter
bankruptcy or other financial reorganization and insolvency
or payment arrears shall be considered as indicators of acco-
unt receivable that must be corrected.“ Conflict between in-
ternational and Serbian tax standards is obvious.
Amend the Law on Corporate Profit Tax by introducing
mechanism that permits companies that have made provi-
sions too early so as to be recognized for taxation within
one year (to provide clear view of the business solvency and
risks potential investor would undertake), to deduct provisi-
ons previously considered as tax non-recognized expenditu-
res when all requirements of recognition for taxation purpo-
se have been met.
Amendments to the Law on Corporate Profit Tax are nece-
ssary to fill aforementioned legal gap and allow corrections
in the corporate tax balances. All this must not jeopardize
credibility of financial reporting.
To that extent, we hereby recommend amendments to Ar-
ticle 16 of the Law on Corporate Profit Tax to add new para-
graphs as follows:
„When provisions of accounts receivable are executed at the
point in time when requirements for such taxation related
value corrections have been met as prescribed by the Law,
write-off of such accounts receivable shall be recognized for
taxation purposes in any following fiscal year.
When previously tax non-recognized provisions mature for
payment, they shall be tax recognized as expenditures and
the taxpayer shall accordingly correct the tax balance.
All write-offs, provisions for accounts receivable and other
accounts receivable considered as tax non-recognized expen-
ditures that were subsequently reported as regards to ban-
kruptcy procedure may be recognized in the taxpayer’s tax
balance immediately upon initiation of bankruptcy procedu-
re related to the subject obligor.“
REGULATIONS
• Law on Corporate Profit Tax (Official Gazette or RS 25/01, 80/02, 43/03, 84/04, 18/10, 101/11, 119/12, 47/13, 108/13, 68/14,
142/14, 91/15 and 112/15)

29greybook9
1.17 STANDARDIZE PENAL POLICY OF THE ACCOUNTING LAW
Fines prescribed in Article 46 of the Accounting and Auditing
Law were very strict for legal entities failing to comply to the
provisions of the subject law, irrespective of the size of legal
entity, i.e. small, medium or large legal entity.
On the other hand, Article 47 of the Accounting Law prescri-
bed lower fines for entrepreneurs keeping books as per pro-
visions of aforementioned law.
Considering that operations of small legal entities are rela-
tively similar in scope and complexity to those of entrepre-
neurs, efforts should be made to equalize fines for failure to
comply with provisions of the Accounting Law.
Amend Article 46 of the Accounting Law by prescribing lower
fines for small legal entities and entrepreneurs, as well as Ar-
ticle 47 where minimum fines should be reduced.
Penal policy of the Accounting Law should be adapted to
real economic strength of small legal entities and entrepre-
neurs. To that extent, we would like to highlight high maxi-
mum penalties prescribed for infringement procedures and
economic offences.
We hereby recommend a safeguard for small legal entities –
reduction of minimum statutory fine (100,000.00 RSD) and
equalization of fines for small legal entities and entreprene-
urs during the first five years as of the day of foundation of
small legal entity.
REGULATIONS
• Articles 46 and 47 of the Accounting Law (Official Gazette of RS 62/13)
Even though the new Accounting Law was adopted in July 2013,
subject law applied the same method to regulate penal policy as
the one from Articles 68 and 69 of the Accounting and Auditing
Law (Official Gazette of RS 46/06, 111/09 and 99/11)
Instead of accepting recommendations and reducing minimum fi-
nes for small legal entities, they were inflated 20 times both for
small legal entities and entrepreneurs.
Therefore, subject recommendation was not implemented, even
though completely new law in the field of accounting was adopted.

30
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1.18. REDUCE WAGE TAXES AND BENEFITS
Article 44 of the Law on Mandatory Social Security Insuran-
ce Contribution prescribed high rates of wage benefits (26%
for mandatory retirement and disability insurance, 10.3% for
mandatory health insurance and 1.5% for unemployment in-
surance), while Article 16 of the Law on Personal Income Tax
prescribed 10% tax rate for wages. Tax base is the gross wa-
ge, including taxes and benefits paid from wages (as defined
in Article 105, Paragraph 2 of the Labor Law). All subject
dues relative to net wage paid to an employee amount aro-
und 63%.
Such high costs are additional burden for employers, which
is something that is directly correlated with shadow economy
and poor competitiveness of employers that have decided to
report full taxes and benefits for wages they actually pay to
their staff members. Another observable trend is that em-
ployers pay smaller part of money to their workers, particu-
larly management staff, through wages, while the other big-
ger part is paid in the form of dividend that are subject to
15% tax rate according to the Law on Personal Income Tax.
Wage taxes and benefits should be reduced to eliminate sha-
dow economy and create competitive business environment
for those employers paying full wage taxes and benefits.
Otherwise, collection from subject sources will continuou-
sly drop as one group of businesses will move from legal to
shadow economy sphere, while other businesses paying full
wage taxes and benefits will either reduce their scope of work
or shut down all operations due to inability to compete.
Amend Article 44 of the Law on Mandatory Social Security
Insurance Contribution and Article 16 of the Law on Per-
sonal Income Tax by reducing rates used for calculations of
wage taxes and benefits by at least 30% for rates currently
applicable to lowest wages with indications of progressive
wage taxation through amendments to the Law on Personal
Income Tax.
We hereby recommend elimination of wage taxes and bene-
fits for business start-ups during the first year, as well as re-
duction of minimum tax base for calculation of benefits rela-
ted to part-time employees.
Subject recommendation would help, at least partially, the
alignment of labor costs in Serbia with those from compara-
tive European practice, thus, advancing employer competiti-
veness on EU market.
REGULATIONS
• Law on Mandatory Social Security Insurance Contribution (Official Gazette of RS 84/04, 61/05, 62/06, 5/09, 52/11, 101/11, 47/13,
108/13, 57/14, 68/14, 5/15 112/15 and 5/16) and
• Law on Personal Income Tax (Official Gazette of RS 24/01, 80/02, 135/04, 62/06, 65/06, 31/09, 44/09, 18/10, 50/11, 91/11,
93/12, 114/12, 47/13, 48/13, 108/13, 57/14, 68/15, 5/15, 112/15 and 5/16)

31greybook9
1.19 STREAMLINE EXPROPRIATION PROCEDURE
Complex land expropriation procedure complicates (frequently
it may even block) large construction projects – construction of
transportation infrastructure, energy structure and large indu-
strial facilities. Expropriation is comprised of three procedures
conducted simultaneously, which may take years:
− Procedure of identification of public interest (Article 20 of
the Expropriation Law), conducted by the Government of RS,
which may be the subject of administrative lawsuit;
− Expropriation procedure (Articles 25–36 of the Law), conduc-
ted by the municipal administration, which may be the subject
of an appeal to the ministry in charge of finance and subsequ-
ently administrative lawsuit;
− Procedure of determination of compensation (Articles 56–62
of the Law), conducted by the municipal administration, or
the court if the level of compensation cannot be determined
in agreement.
Article 34 of the Law is the one that particularly complicates and
obstructs expropriation. The article prescribed that the expro-
priation beneficiary will be entitled to enter into possession of
expropriated property on the day the decision on compensation
has entered into effect. In practice this means until the court ru-
ling on compensation for expropriation subject to lawsuit (that
may prove to be very lengthy and, thus, block the entire inves-
tment, due to unrealistic request by owner of just one land lot)
has entered into force. This is unjustified, especially considering
the responsibility of the expropriation beneficiary from Article
28 of the Law to provide bank guarantee for RSD amount requi-
red to collateralize the compensation for expropriated property.
Obsolete concept of the Law prescribing that expropriation is
allowed only for the benefits of the national government, local
government, public companies, business entities with majority
government share and similar is a barrier to major investments
in infrastructure and energy, something that the Government is
allegedly striving to. In many cases, such concept imposes un-
constitutional solution to use lex specialis for certain investors
so as to classify subject investors as expropriation beneficiaries,
as well as to use the same legislation to grant other unusual
benefits.
Amend Article 8 of the Expropriation Law by expanding the
sphere of potential expropriation beneficiaries, i.e. prescribe
expropriation for benefits of all legal entities because all legal
entities, irrespective of ownership structure, can act in public
interest. Subject solution is well known in EU and Croatia
has even prescribed this entitlement for natural entities.
Amend Articles 34 and 35 of the Expropriation Law to per-
mit expropriation beneficiary to enter into possession of
expropriated property immediately upon finality of expro-
priation decision.
Prescribe also servitude for the benefits of legal entities inste-
ad of only government, local government, their companies
and natural entities.
REGULATIONS
• Expropriation Law (Official Gazette of RS 53/95, Official Gazette of FRY 16/01, Official Gazette of RS 20/09 and 55/13)

32
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1.20 INTRODUCE CONTROL OF PUBLIC SERVICE FEES AND CHARGES COMPLIANCE WITH THE PUBLIC SERVICE
COST SETTING METHODOLOGY
The Rulebook on Methodology and Procedure of Public Ser-
vice Cost Setting, adopted by the Minister of Finance and
Economy in February 2013, did not create any impact on
cost cutting related to those costs paid by business and citi-
zens before republic bodies.
Subject methodology is incomplete because it did not pro-
vide parameters that are precise enough for cost setting as
regards to public service price setting, nor it did provide cle-
ar methodology of cost distribution by individual services
considering their type and complexity. The Rulebook did not
consider differences in work organization in various public
service providers and, thus, it is inapplicable in practice.
For all reasons stated above, subject methodology does not
allow adequacy control related to fees and charges setting.
Here we would like to repeat that Article 17 of the Bud-
get System Law prescribed that the amount of fee must be
adequate in terms of cost of public service provision and that
it must not be set as a percentage of variable base, somet-
hing that cannot be achieved with the applicable Rulebook.
The Rulebook on Methodology and Procedure of Public Ser-
vice Cost Setting should be supplemented to prescribe preci-
se methodology for fees and charges setting by public servi-
ce providers. Subject methodology should be applicable for
all public service providers and it should precisely prescribe
what costs may be included in public service price setting, as
well as clear methodology of cost distribution by individual
services considering their type and complexity.
Prescribe the Rulebook compliance control mechanism for
fees and charges paid to public service providers.
REGULATIONS
• Rulebook on Methodology and Procedure of Public Service Cost Setting (Official Gazette of RS 14/13, 25/13 and 99/13)

33greybook9
1.21 ESTABLISH PUBLIC REGISTER OF NON-TAX CHARGES AND REGULATE FEES FOR USE OF PUBLIC GOODS
For a long time already, the Ministry of Finance has been
supporting the need for finalization of the Draft Law on Fees
for Use of Public Goods. Proclaimed goal of the subject law
is neutralization of uncontrolled introduction of para-fiscal
charges. Subject goal would be achieved through a standard
integrated in the law regulating that all financial liabilities
charged to businesses by holders of public authority, that
are not taxes, fees and charges, will be prescribed solely by
means of the subject law.
Since the Grey Book VI, when this recommendation was first
formulated, NALED’s quarterly reports have been presen-
ting overview of the Ministry of Finance’s activities related
to the Draft Law on Fees for Use of Public Goods. Let us
remind you that the foundation of activities related to this
law is the Article 18 of the Budget System Law, objective of
which is neutralization of uncontrolled introduction of para-
fiscal charges.
The Ministry of Finance should intensify activities related to
the Draft Law, but special consideration should be given to
several crucial prerequisites and principles:
1. Clear definitions of charges, fees, lease, licenses, permits
and other to create safeguards for consistent implementa-
tion of the Budget System Law and provide full coverage of
all charges within the future Law on Charges.
2. Draft Law must include all charges currently regulated by
all sectoral laws.
3. Eliminate or review the level of charges that are para-fiscal
charges by their nature.
4. Enact systemic solution – the Government of RS has put
the Ministry of Finance in charge of creating conditions
for establishment of electronic Register of Charges availa-
ble to the public by amending the Budget Law or enacting
the Law on Fees for Use of Public Goods to prescribe that
a prerequisite for charging a specific nominal fee and/or
public service charge, both on national and local level, is
registration of subject fee and/or charge in the Register.
Therewith, introduction and/or assessing of the subject
fee would be a subject of legal compliance control.
There is a possibility that establishment of the Register of
Charges by means of a law would lead to abandoning hard
to implement solution of prescribing all charges for use of
public goods within a single law, because such solution wo-
uld put introduction and/or assessing of charges under su-
pervision of the ministry in charge of keeping such register.
REGULATIONS
• All legislation regulating charges for use of public goods

34
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1.22 ELIMINATE REPUBLIC ADMINISTRATIVE FEE FOR APPLICATIONS TO THE CADASTRAL OFFICE
In addition to data and service charges, the Cadastral Office
of the Republic Geodetic Authority of the Republic of Serbia
insists on charging republic administrative fee for their pro-
cedures.
Article 30, Paragraph 1 of the Law on Amendments and
Addenda to the Law on State Survey and Cadastre (Offici-
al Gazette of RS 65/13) prescribed that provisions on tariff
number 216, 217 and 218 of the Tariff of the Republic Ad-
ministrative Fees from the Law on Republic Administrative
Fees shall cease to exist (reduction of costs borne by service
users).
Rulebook on Service Fees of the Republic Geodetic Authority
(Official Gazette of RS 116/13), harmonized the termino-
logy of RGA service charges with the Budget System Law by
changing the term from charges to fees.
However, in addition to fees set in the Rulebook adopted
by the General Manager of RGA, all procedures conducted
by RGA still include payment of 290.00 RSD worth republic
administrative fee in line with tariff number 1 of the Tariff of
the Republic Administrative Fees from the Law on Republic
Administrative Fees.
Hence, service users pay a charge for the same service both to
RGA and the budget of the Republic of Serbia. This is inad-
missible in view of the provisions of Article 17, Paragraph 8
of the Budget System Law that has explicitly prescribed that
only one fee shall be charged for a single public service.
Amend the Tariff of the Law on Republic Administrative
Fee aimed at harmonization with the Budget System Law by
prescribing that the tariff number 1 shall not be charged for
procedure conducted by RGA.
Legal act of the entity in charge should order harmonization
of the Republic Geodetic Authority’s proceedings with Ar-
ticle 17, Paragraph 8 of the Budget System Law and elimina-
te the practice of double charges for the same public service.
Since RGA is entitled to charge fees as per Article 174 the
Law on State Survey and Cadastre, it shall be deprived of the
entitlement to charge subject fee as per the Law on Republic
Administrative Fees.
The Ministry of Finance corrected this error in June 2013 by
deleting the entire chapter XXVII on Tariff from the Law on
Republic Administrative Fees regulating administrative fees
for Cadastre entries.
However, procedures conducted by RGA are still subject to
290.00 RSD worth republic administrative fee as per tariff
number 1 of the Tariff.
REGULATIONS
• Law on Republic Administrative Fees (Official Gazette of RS 43/03, 51/03, 61/09, 54/09, 50/11, 70/11, 55/12, 93/12, 47/13,
65/13, 57/14,83/15, 112/15 and 50/16)

35greybook9
1.23 STREAMLINE TEMPORARY ADMISSION
Companies involved in software development or product
promotion use samples (hardware) imported from abroad.
Such goods are to be imported on temporary basis and tem-
porary admission is limited time wise. In case of extension of
the temporary admission, subject goods must be subjected
to custom and import procedures. RSO certificate is required
for customs procedure. Main problem here is that obtaining
subject certificate is lengthy and costly. This is the reason
why businesses often decide to return samples back abroad
and repeat the temporary admission procedure, which is su-
bject to additional expenses.
Amend customs regulations to permit more flexibility for
temporary admission. Import procedure should make di-
stinction between import products that will be subject of
further sale in Serbia and those that will not be subject of
further sale.
Permit import without subject certificate if the import pro-
duct is not subject of further sale.
REGULATIONS
• Customs Law (Official Gazette of RS 18/10, 111/12 and 29/15)
• Law on Technical Requirements for Products and Conformity Assessment (Official Gazette of RS 36/09)
• Technical legislation regulating standards

36
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1.24 STREAMLINE EXPRESS DELIVERY PROCEDURES
Implementation of the Customs Law and the Regulation on
Customs and Courtesies is accompanied with problems rela-
ted to express delivery customs procedure.
Implementation of abovementioned legislation is dependent
upon development of the customs information system and
no express delivery procedure streamlining has been done in
practice.
Connecting customs and company servers with duplex data
exchange would provide for trade advancement, standardi-
zation and procedural streamlining. This would help signifi-
cantly faster express delivery clearing through customs. This
issue is of great importance for further economic liberalizati-
on and one of prerequisites for further foreign investments.
De minimis delivery (delivery excluded from both customs
duty and VAT up to pre-set value) should be also prescribed.
Current definition of small non-commercial delivery (worth
50 euros and less) provides for no customs duty, but VAT
is applicable. De minimis mechanism was introduced in Eu-
rope because it is more expansive to organize collection of
such duties than the duties themselves. This issue is of great
importance for further e-commerce developments.
The following is necessary to ensure further improvements in
the field of customs:
− Development of efficient customs information system
and implementation of streamlined procedures, including
connecting to company servers and automatic clearing
through customs;
− Facilitate full implementation of streamlined procedures
set in legal framework;
− Introduce and define de minimis delivery, i.e. delivery exclu-
ded from both customs duty and VAT up to pre-set value;
− Ensure further streamlined procedure improvements for
delivery clearance through customs worth up to 1,000.00
Euros and examine possibility for moving this limit to
5,000.00 euros;
− Provide efficient education for customs staff to ensure pro-
per implementation of new legal framework in practice and
uniformity of implementation aimed at creating predicta-
ble business environment for commerce and investment
inflows;
− Reduce discretionary rights of customs officers and intro-
duce accountability in terms of holding/control of delivery
without adequate legal grounds, coupled with risk analysis.
REGULATIONS
• Customs Law (Official Gazette of RS 18/10, 111/12 and 29/15)
• Regulation on Customs and Courtesies (Official Gazette of RS 93/10, 63/13, 145/14, 95/15 and 44/16)
• Other by-laws providing for implementation of relevant provisions of the Customs Law

37greybook9
1.25 ENACT PROCEDURE OF BUSINESS ENTITY DELETION FROM BRA REGISTERS
Paragraph 7 of Article 29 of the Law on Tax Procedure and
Tax Administration has made business entity and entrepre-
neur deletion from the Business Entity Register, kept by the
Business Registers Agency (BRA), more difficult. Evidence of
cessation of tax liabilities – tax clearance, issued by the Tax
Administration, maximum five days old, must be previously
obtained and submitted simultaneously with the applicati-
on for business entity deletion. Considering the fact that tax
clearances are issued both by local and republic tax admini-
strations, frequently the first tax clearance expires before the
second has even arrived (tax administration is due to issue
subject clearance within 15 days) all due to short period of
validity (5 days).
The latest amendments to Article 29 of the Law, new Para-
graphs 9 and 10, have prescribed that BRA cannot delete
business entity from the Register, nor to register status chan-
ges or conduct data changes related to the founder and/or
member, name, seat, share and form of organization, from
the time of notification by the Tax Administration that the
subject business entity will be subject of tax control until the
time of notification that the tax control has been completed,
irrespective of the subject control duration. Aforementioned
provisions are in direct conflict with Article 58, 83 and 84 of
the Constitution of RS, as they jeopardize rights to freedom
of enterprise and free use of property. Subject provisions
cannot produce results in struggle against so-called „phan-
tom companies“, and they only create negative impacts on
investment inflows.
Amend Article 29 of the Law on Tax Procedure and Tax Ad-
ministration as follows:
− Extend 5 day tax clearance validity period from Paragraph
7 to 15 days;
− Paragraphs 9 and 10 must be declared null and void due to
possible unconstitutionality.
REGULATIONS
61/07, 20/09, 53/10, 101/11, 2/12, 93/12, 47/13, 108/13,68/14, 105/14, 91/15, 112/15 and 15/16)

38
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1.26 PUBLISHING THE LIST OF TAX DEBTORS
Amendment to the Law on Tax Procedure and Tax Admini-
stration from 2014 has redefined obligation of the Tax Ad-
ministration and, thus, local tax authorities, to publish lists
of tax debtors, to read: „The Tax Administration shall pu-
blish on its webpage the quarterly data - overview on the last
day of the last month of the quarter - on the name, i.e. name
and surname, TIN and amount of tax debt of legal entities
that owe delinquent taxes in the amount of 20,000,000.00
RSD and above and entrepreneurs who owe delinquent taxes
in the amount of 5,000,000 RSD and above. This shall not
constitute violation of official secret.“ (Article 7, Paragraph
7 of the Law)
Debt limits were set for legal entities and entrepreneurs that
if exceeded will not be considered an official secret, whi-
le obligation to publish list of debtors-natural entities was
completely eliminated.
This is concealing data of public interest and a possibility
for some participants in business and political life to mislead
public in regard to their business and political credibility. Su-
bject provision defies anti corruption efforts.
If the reason for this lack of transparency is personal data
protection, than it would be logical to eliminate the practi-
ce of publishing the list of debtor because legal entities that
owe delinquent taxes in the amount of 20,000,000.00 RSD
and above and entrepreneurs who owe delinquent taxes in
the amount of 5,000,000 RSD and above are, thus deprived
of the right to personal data protection comparing to those
that owe less than 20,000,000.00 RSD and/or 5,000,000.00
RSD. None of the entities that owe delinquent taxes are enti-
tled to protection of data on that specific debt.
Amend the Law on Tax Procedure and Tax Administration
to delete the official secret related debt limit for legal entities
and entrepreneurs and restore the obligation to publish list
of debtors from among natural entities.
Hereby, we recommend to amend the wording of Article 7,
Paragraph 7 of the Law on Tax Procedure and Tax Admini-
stration, to read: „The Tax Administration shall publish on its
webpage the quarterly data - overview on the last day of the
last month of the quarter - on the name, i.e. name and sur-
name, TIN and amount of delinquent tax debt of taxpayers
that are late more than 30 days.“ Subject provision will not
violate the official secrecy obligation.
Benefits from publishing the list of tax debtors are many,
among which the most significant are as follows: (a) infla-
ted pressure on bad debtors and, consequently, improved
collection; and (b) improved citizens’ trust in tax authorities,
especially regular taxpayers. This would constitute a signi-
ficant contribution to successful collection of outstanding
commitments, anti corruption efforts and trust in central,
provincial and local authorities.
REGULATIONS
61/07, 20/09, 53/10, 101/11, 2/12, 93/12, 47/13, 108/13,68/14, 105/14, 91/15, 112/15 and 15/16)

39greybook9
1.27 ENACT PRECISE CRITERIA FOR REPORTING CONCENTRATION
Article 61 of the Law on Protection of Competition, with
reference to Article 17 of the same law, set that reporting
concentration is related solely to revenues generated by all
participants in concentration, with no consideration of bu-
siness activities of companies participating in concentration.
This creates paradoxical situations, such as, concentration is
to be reported in case of acquiring administrative buildings
through purchasing property undergoing bankruptcy proce-
dure (around 100,000 € worth). In addition, cost of fees and
preparation of comprehensive documentation in such cases
may even exceed the value of the property unit subject to
acquisition although subject property is completely unrela-
ted to the core activity of the purchaser.
Amend Article 61 of the Law on Protection of Competition
by revising and correcting criteria for reporting concentrati-
on to add the criterion of performing identical or similar core
activities to criterion of annual revenues of participants in
concentration, which is something that may impact protec-
tion of competition.
Additionally, we hereby suggest prescribing less comprehen-
sive documentation attached to the concentration report.
REGULATIONS
• Article 61 of the Law on Protection of Competition (Official Gazette of RS 51/09 95/13)
New Regulation on the Contents and Method of Concentration Repor-
ting (Official Gazette of RS, no. 5/2016), prepared by the Commissi-
on for Protection of Competition, provided for simple procedure and
reduced quantity of required documents for reporting entities meeting
the requirements of concentration reporting under short procedure.
solved


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