Amendments to the Corporate Income Tax Law

30. December 2020 | Reading Time: 2 Min

The Law on Amendments to the Corporate Income Tax Law was adopted on 17 December 2020 and published in the Official Gazette of the Republic of Serbia no. 153/2020 on 21 December 2020. The law will be applied from 1 January 2021, and below we provide an overview of the most important amendments.

Capital gains and losses

The latest amendments envisage that the capital gain is realized through the sale (or other transfer for a fee) of the investment unit of the investment fund, regardless of whether it is an opened or closed investment fund.

In addition, it is envisaged that the capital gain is also realized through the sale of digital property, provided that the taxpayer has a license to provide services related to digital property and if he acquired this property solely for resale within the provision of services related to digital assets.

It is specified that capital gains realized from the sale of digital assets should not be included in the tax base if the funds from that sale were invested in that tax period in the share capital of a resident taxpayer, i.e. an investment fund that is a resident of the Republic of Serbia, i.e. whose centre of business and investment activities is in Serbia. In this way, investors would be motivated to invest in investment funds.

Also, capital losses arising from the sale of digital property cannot be offset against capital gains if money from the sale is invested in the manner previously explained.

In accordance with the latest amendments, income that a non-resident legal entity realizes based on membership in an alternative investment fund that does not have the status of a legal entity is considered as dividend. An alternative investment fund management company is obliged to submit a tax return within 3 days from the day of payment of income that is taxable with withholding tax.

Investment incentives

It is specified that newly employed persons are not persons who, starting from the last day of the tax period preceding the investment period, were employed directly or indirectly in a related party, as well as persons who are not directly employed by the taxpayer. Therefore, new employees are also those newly employed persons who were employed by related parties, but provided that they were not employed by these related parties starting from the last day preceding the beginning of the investment period.

The provisions of this Law apply to the determination, calculation and payment of tax liability starting for 2021, and the provisions relating to digital property shall apply from the date of entry into force of the law governing digital property.

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