Amendments to the Corporate Income Tax Law

Among other changes, the amendment of the Corporate Income Tax Law is expected to be enforced by the end of year.

The most important change concerns additional reporting on business within international groups, which has already been implemented in almost all European countries. The report is intended to be aligned with the BEPS. According to BEPS Action Plan 13, all large multinational enterprises (MNEs) are required to prepare a Country-by-Country report with aggregated data on the global allocation of income, profits, taxes paid and economic activities among the tax jurisdictions in which they operate. This CbC report is shared with tax administrations in these jurisdictions, for use in high level transfer pricing and BEPS risk assessments.

The amendments to the Law define an international group of related legal entities as a group of entities that are interconnected by ownership or control in terms of IASs or IFRSs, and whose total consolidated income is recognized in the consolidated financial statements for the period preceding the reporting period at least EUR 750 million in RSD equivalent at the average exchange rate of the National Bank of Serbia at the date of adoption of the consolidated financial statements, and:

  • one or more of group members has an obligation to prepare, present, submit and disclose consolidated financial statements in accordance with IAS or IFRS, or would have that obligation if it were a legal entity whose shares are traded on a regulated market in the Republic Serbia or outside Serbia
  • in which at least one legal entity is a resident of another tax jurisdiction in relation to other members of the international group, or at least one legal entity is a resident of one tax jurisdiction and is subject to taxation in another tax jurisdiction based on performing business activity through a permanent establishment.

The CbC report will be submitted no later than 12 months after the end of the business year for which the annual report is submitted, and the Minister of Finance, relying on sources related to good practice in reporting on controlled transactions of the OECD, will be closer to arrange the conditions and manner of submission of the annual report. The first application of this requirement is for the tax period beginning in 2020.

Other amendments are regarding the capital gain, i.e. loss of investment funds, as well as the granting to bank (as taxpayer) the right to a tax credit of 2% of the remaining debt determined in accordance with the Law on conversion of home loans indexed in CHF.