At the proposal of the Ministry of Finance, and at the session of the Government on 30 July  2020, a Conclusion has adopted, by which the Government provides consent for economic entities, under certain conditions, to pay additional direct benefits and approve the postponement of certain public revenues.

As in the case of the Decree on fiscal benefits and direct benefits to economic entities,  the Conclusion regulates two types of measures:

  • direct benefits - non-refundable payment of funds;
  • fiscal benefits (delaying the maturity of certain public revenues).

Based on the rules defined by the Conclusion, we can practically classify economic entities into four categories, as follows:

  • economic entities (except large legal entities) that have realized the right on direct benefits according to Decree and which were paid to them in July;
  • large legal entities (based on financial statements for 2018) that had right on direct benefits according to Decree and did not lose that right;
  • economic entities who meet the conditions from the Decree, but do not belong to the groups from the first two points (i.e. an entity that had right touse measures according to the Decree, but did not accept them);
  • economic entities that have been established and registered or have acquired the status of VAT payers (meaning natural persons who have the status: entrepreneur other person) after 15 March and ending on 20 July 2020.

Depending on the category to which the economic entity belongs, its actions in the procedure of exercising the right to new measures depend (in terms of submitting tax returns, the amount of direct benefits, postponing the maturity of public revenues, opening a special purpose account, etc.). In that sense, in each specific case, it is necessary to recognize the category to which the economic entity belongs, and then consider the rules prescribed for that group of economic entities. Namely, the rules are different, both in terms of exercising the right to direct benefits, and in terms of the right to defer the maturity of public revenues.

1. DIRECT BENEFITS TO ECONOMIC ENTITIES

Economicentities from the first point are paid additional direct benefits from the budget in August and September 2020. In each of these two months, budget grants in the amount of 60% of direct benefits paid to them in July 2020 are made to economic entities. This category of economic entities realizes additional payments practically automatically, without the obligation to take any action (submission of applications, requests, etc.). However, if a economicentity wants to use the benefit in the form of deferred payment of taxes and contributions on wages, it has the obligation to file a tax return in accordance with the defined conditions (more details in point 3 of this news).

Large legal entities (category of economic entities from the second point) realizethe additional direct benefits under conditions that they submit the SL Form for June and July 2020 by 15 August 2020 at the latest. The number of employees stated in the SL Forms for June and July is multiplied by the amount of 50% of the minimum wage for March 2020, which amounts to RSD 15,183.52. The first payment of direct benefits will be made in August, and the second in September 2020.

The third category of economic entities has the right on direct benefits in the amount of 120% of the basic minimum net salary for March 2020 (RSD 36,440.45) per employee, under certain conditions. It is necessary, no later than 15 September 2020 to submit the Form PPP-PD for the accounting period August, whereby in field 1.4. - the date of payment is entered 5 January 2021. Therefore, only one application is submitted with the payment date: 5 January, 2021, and one payment will be made (most likely by the end of September).

Newly established economic entities (from point 4 of our categorization) are divided into two groups, as follows:

  • economicentities that have employees, ie submit the Form PPP-PD - this group submits the application for August no later than 15 September 2020, with the date of payment: January 5, 2021;
  • economic entities that do not submit the PPP-PD Form (entrepreneur lump sum, entrepreneur other person, as well as entrepreneur and entrepreneur farmer who have not opted for personal income, which means that they do not submit an individual tax return) - this group does not submit the PPP-PD Form, the right to direct benefits realizes automatically.

This (fourth) category of economic entities has right on direct benefits in the amount of 120% of the minimum net salary (36,440.45 dinars) per employee, and direct benefits will be paid once in September 2020.

2. SPECIAL PURPOSE ACCOUNTS (COVID-19) AND DEADLINE BY WHICH THE PAYMENTS SHOULD BE USED

Payment of direct benefits is made to a special purpose account - COVID-19 with the bank that maintains the current account of that economicentity (valid for all four categories).

Economic entities that have opened special purpose accounts - COVID-19 payments of direct benefits are made to those accounts.

For economic sentities that do not have opened special purpose accounts - COVID-19, the accounts will be opened in order to realize the payment of direct benefits in accordance with the Conclusion. Businesses that do not have a special purpose account should not take any action in this regard. If the economic entity has an account with only one bank, a special purpose account will be opened with that bank. If the economic entity has accounts with more than one bank, the Tax Administration will determine on its own initiative with which bank a special purpose account will be opened, about which it will inform the Treasury Administration.

The Decree stipulates that all economic entities have the obligation to use the funds received on the basis of direct payments by 15 August 2020 at the latest. However, according to Article 10 of the Conclusion, economic entities use the funds received on the basis of direct payments by 31 October 2020 at the latest. After the expiration of the stated deadline, special purpose accounts - COVID-19 will be closed and unused funds from those accounts are transferred to a special budget account.

3. FISCAL BENEFITS - DELAYING THE MATURITY OF CERTAIN PUBLIC REVENUES

The Conclusion envisages postponing the maturity for the payment of public revenues, only for one month, as follows:

  • taxes and contributions on salaries and wage compensations;
  • taxes and contributions on personal earnings of entrepreneurs;
  • taxes on income from self-employment.

There is no additional delay in the advance payment of corporate income tax.

Taxes and contributions on salaries, salary compensations and personal earnings paid by economicentities that submitted the PPP-PD Form for August 2020 with the entered payment date: 5 January 2021,  due for payment on 5 January  2021. The rule applies to all (four) categories of economic entities, with notice that - in the case of the first two categories of economic entities - submiting a tax return for this purpose has nothing to do with realizing the right on direct benefits.

In the case of lump sum entrepreneurs from the first category of economic entities (those who relised the right on direct benefits in accordance with the Decree and which were paid to them in July) - the advance payment of tax on income from self-employment due in August 2020 is postponed. The advance payment is due on 5 January 2021.

In the case of other lump sum entrepreneurs (those who had right on direct benefits from the Decree but did not use by newly registered lump sum entrepreneurs in the period from 15 March to 20 July 2020) - the advance payment of income tax is postponed which due in September 2020. The advance payment is due on 5 January 2021.

In the case of entrepreneurs (except lump sums) from the first category of economic entities (those who realized the right on direct benefits in accordance with the Decree and paid to them in July) - the advance payment of income tax from self-employment due in August 2020 is postponed. The maturity of this advance payment is postponed until the day of submitting the final tax return for taxes and contributions to income from self-employment for 2020 (no later than 15 April 2021).

In the case of other entrepreneurs, except for lump sums (those who had a right on direct benefits from the Decree but were not used by newly registered lump sum entrepreneurs in the period from 15 March to 20 July 2020) - the advance payment of income tax is postponed which is due for payment in September 2020. The maturity of this advance payment is postponed until the day of submitting the final tax return for taxes and contributions to income from self-employment for 2020 (no later than 15 April 2021).

4. LOSS OF THE RIGHT TO USE MEASURES

An economic entity loses the right to use the measures from the Conclusion if it reduces the number of employees by more than 10% in a defined period, not counting employees who concluded a fixed-term employment contract with the economic entity before 15 March 2020 for the period ending in defined period.

The relevant period is from 15 March 2020 until the expiration of the period of three months from the last payment of new direct benefits in accordance with the Conclusion.

For example, if the last payment of direct benefit in accordance with the Conclusion is made on 10 September 2020, the observed period expires on 10 December 2020.