The Law on Amendments to the Law on Value Added Tax

On September 28, 2015, the National Assembly of the Republic of Serbia adopted the Law on Amendments to the Law on Value Added Tax.

The amendments provide that for a taxpayer, who is engaged in construction activities, the application of the system of internal accounting of VAT will be extended to all recipients of goods and services in the field of construction. In doing so, the system of internal VAT accounting will be expanded to additional transactions of goods and services (e.g. Transport mortgaged real estate, etc.).

For the domestic persons who receive services from foreign persons, which are considered to been made in Serbia, important changes refer to the regulation defining the obligations of a foreign persons to be registered as a VAT payers, i.e. to appoint a tax representative, which will lead to the situation where the recipients of goods and services will no longer have an obligation of internal calculation of VAT (except for prescribed exceptions and in cases when the foreign person does not appoint a tax representative).

Tax rates remain unchanged, provided that the application of special rates extends to all passenger transport (intercity and international), as well as accommodation services in all the restaurants that have such status in accordance with the Law on Tourism.

Significant changes also apply to the rights relating to the tax deduction input. On the one hand, prescribing the right to deduct input tax on the purchase of goods for equipping the administrative premises (e.g., carpets, TV, decorative items, etc.) was suggested. On the other hand, the right to deduct input tax based on expenses for employees food and transportation has been terminated.

In addition to the foregoing, amendments to the Law on VAT also apply to:

  1. Supply of electricity;
  2. Special taxation for second-hand motor vehicles;
  3. The tax liability (in some cases, the tax liability will be created on the day of the invoice issuing);
  4. Internal calculation of VAT obligation on the basis of the advance paid to a foreign person;
  5. Transfer of assets in accordance with Article 6, paragraph 1, item 1) of the Law on VAT;
  6. Method of determining the tax base in the case when a taxpayer receives subsidies;
  7. Certain tax exemptions;
  8. Obligation to inform the tax authorities about the purchase of goods and services from farmers and persons engaged in trade of secondary raw materials by taxpayers (notification will be made under the new rules);
  9. Determination of the tax period;
  10. Reimbursement of VAT to foreign taxpayers;
  11. Deadlines for VAT refund;
  12. Investment in facilities and correction of input tax deduction.

Given that any amendment of the law means and supporting changes in bylaws a new VAT Rulebook, which will replace the existing twenty is in preparation.

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