The Republic of Serbia's National Assembly recently gave the green light to stirring amendments in both the Personal Income Tax Law and the Law on Social Security Contributions. These changes are slated to take effect on the eighth day following their publication in the Official Gazette of the Republic of Serbia and will be applicable as of January 1, 2024.
This marks a significant milestone in the ongoing evolution of Serbia's fiscal and social welfare frameworks, emphasizing the commitment to fostering a more robust and equitable financial landscape.
Citizens and stakeholders are encouraged to familiarize themselves with these modifications as they come into force, ensuring a seamless transition into the updated regulatory landscape.
Key changes and amendments to these laws include:
- Increase in the non-taxable income threshold to 25,000 dinars (approx. EUR 210) per month, up from the previous 21,712 dinars (approx. EUR 185) per month. This change reduces the tax base for income tax, resulting in a lower tax obligation for individuals earning income through employment or personal business.
- Extension of the application period for the ‘old' incentives for newly employed individuals until December 31, 2024. These incentives aim to stimulate employment by granting tax and social security contribution refunds for certain conditions related to the hiring of unemployed individuals for a specific duration.
These changes offer individuals tax relief through a reduction in their tax burden, concurrently fostering employment by extending incentives to employers who bring new workers on board. The extension of this incentive period caters to both existing employers who meet the stipulated conditions and those opting to hire fresh talent in 2024. The rate of the refund is contingent on the number of newly hired individuals, providing a compelling incentive for employers to expand their workforce.
The ‘old' incentives apply to a diverse array of employers, encompassing legal entities, entrepreneurs, and agricultural entrepreneurs. The overarching aim is to particularly benefit micro and small legal entities. The following are the relief rates associated with these incentives:
- Hiring up to 9 new employees grants a tax relief of 65%.
- Hiring from 10 up to 99 employees results in a tax relief of 70%.
- For those employing more than 100 new individuals, the tax relief is set at 75%.
In conclusion, recent legislative amendments signify a transformative shift in the fiscal landscape. Enhancing financial flexibility for citizens and emphasizing government commitment to individual economic relief, these changes coincide with an extended incentive period for employers. This strategic maneuver aims to stimulate job creation and workforce expansion, fostering a conducive environment for businesses to thrive. The effective implementation, starting January 1, 2024, highlights a nuanced economic policy approach designed for individual financial benefits and positive shifts in national employment dynamics.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.