Amendments to tax laws

The Ministry of Finance has proposed amendments to the following tax laws: the Personal Income Tax Law, the Law on Mandatory Social Security Contributions, and the Corporate Income Tax Law.

Below, we briefly present the most significant proposed amendments to the above-mentioned laws, the application of which is expected to start as of 1 January 2027.

Personal Income Tax Law

• The proposed abolition of the incentive for employing persons with disabilities. Article 21g of the Personal Income Tax Law prescribed an exemption from salary tax for employers who employ a person with a disability for an indefinite period, for up to three years from the date of commencement of employment. As of 1 January 2027, this provision is to be deleted, meaning that the tax incentive will no longer be available for new employments. Rights acquired by 31 December 2026 will continue to apply until the expiry of the prescribed period.
• The proposed abolition of the incentive for employing new persons registered with the National Employment Service. Article 21d of the Personal Income Tax Law provided for a refund of 75% of the paid salary tax for micro and small legal entities, as well as entrepreneurs, who employ at least two new persons from the unemployment register, subject to the prescribed conditions regarding the duration of prior unemployment. The incentive applied exclusively to salaries paid by 31 December 2026. As of 1 January 2027, this tax incentive will cease to apply, and the right to a tax refund on this basis will no longer be available.

Law on Mandatory Social Security Contributions

• Under the proposed amendments, Articles 45, 45b and 45v of the Law on Mandatory Social Security Contributions are repealed, thereby abolishing all employment incentives granted through refunds or exemptions from the payment of social security contributions. As a result, reliefs related to the partial refund of paid contributions for newly employed persons, as well as incentives linked to the employment of persons with disabilities, will cease to apply.
• As of 1 January 2027, these incentives will no longer be available for new employments. The transitional provision applies exclusively to the incentive for employing persons with disabilities for employers who started using the exemption by 31 December 2026 may continue to apply it until the expiry of the originally approved period.

Corporate Income Tax Law

• The abolition is planned of the tax incentive relating to the corporate income tax exemption for enterprises engaged in professional rehabilitation and employment of persons with disabilities.
• It is proposed to abolish the special tax incentive for grantors of concessions and the capital gains tax exemption for concessionaires.
• The abolition has been proposed of the ten-year corporate income tax exemption for large investments and employment prescribed by Article 50a of the Corporate Income Tax Law. More specifically, the tax relief for investments exceeding RSD 1 billion combined with the employment of at least 100 newly employed workers (the so-called 10-year tax holiday) would be abolished. In addition, all subsequent articles regulating this incentive in more detail would also be abolished.
• The tax credit for investments in innovation companies (start-up companies), which was prescribed by Article 50j of the Corporate Income Tax Law, is to be abolished.
• The transitional provision relates exclusively to the ten-year corporate income tax exemption for large investments and the tax credit for investments in innovative start-up companies. Taxpayers who, by 31 December 2026, have started using these incentives, i.e. have reported them in the tax balance and tax return for 2026, will continue to apply them until the expiry of the approved period, without the possibility of acquiring new rights after that date.

We would like to note that the amendments are still in draft form and may be subject to change before final adoption.

For any additional questions, the TPA team remains at your disposal.