5.1.5 Tax laws
There are three relevant tax provisions:
The tax rate on the net income resulting from intellectual property rights is 20%.The Income Tax Law (RS OG No. 24/2001) provides a breakdown of the % share of income derived from intellectual property rights that is tax deductible:
After the Income Tax Law was amended in 2002, 2004, 2006 and 2009 (RS OG No. 80/2002, 135/2004, 62/2006, 65/2006, 31/2009 and 44/2009) the % share of tax deductible income derived from intellectual property changed as follows:
The third type of the tax deductible income (34% share of tax deductible income) was a result of the lobbying of large concert organisers and folk and popular music producers. They were quite successful in their lobbying – previous rate for the folk artists was constantly 10%, while the rates for the first two groups were higher (60% and 50% after the changes in 2006).
The Income Tax Law does not permit individuals to deduct for contributions to charity. This restrictive tax treatment came into effect in 2001 as a part of general tax system reform. The new Law on Personal Income Tax repealed a system of non-standard tax deductions, which could be up to 15% taxable income. Except for donations for cultural purposes, this tax-benefited treatment had been dedicated also for investments in objects with special cultural, historical and scientific value.
Deductions offered, in the Law on the Profits of Legal Entities, on donations to culture are not really considered as an incentive in practice. In addition, the character of cultural donations and types of organisations that may receive tax-benefit contributions were regulated by direction. The donations can be made for: production, prevention and research of cultural values and heritage; improvement of conditions for the development of cultural activities; international cultural cooperation; education and research in the field of culture and stimulation of creative work. The types of organisations that may receive tax-benefit contribution are in the field of: heritage, museums and galleries; artistic, literary and other creative work; film industry and video production; archive, library, botanical and zoological gardens and the publishing of books, publications and booklets.
The Law on the Profit of Legal Entities also regulates tax exemption for non-profit organisations. According to Article 44, non-profit organisations are granted tax exemption under the following conditions:
Incentives introduced during the former regime have disappeared, such as the matching fund "corporation-state / dinar na dinar". New incentives have not yet been created. At present, all donations (except those given through the government) have a 5% gift tax, even if the donation is made in kind. This represents a huge obstacle, even to large donors of equipment. The institution / recipient usually have to find another donor to cover the taxes to be paid to the state.
VAT was introduced in Serbia at the beginning of 2005.The general rate is 20%. A reduced rate of VAT for books, tickets for music manifestations and cinema tickets is 8%.
In 2011, the ministry of trade made a decision to grant tax benefit (tax credits) to foreign companies that are producing films in Serbia. The tax credits are considered as a part of initiatives in the framework of Programme of Branding Serbia and on the temporary base (only for 2011). The Serbian Film incentives are:
International producers can apply via a Serbian service production company or a Special Purpose Vehicle – a company registered in Serbia for the sole purpose of carrying out a particular production. Expenditures such as fees and salaries paid outside Serbia are excluded, as are big-ticket items such as real estate, marketing costs and producer fees. To qualify for this incentive, productions must spend a minimum of 2 million EUR on qualifying Serbian expenditure. Applications for tax credits will be adjudicated on a first-come, first-served basis. No cultural testing is required. However, incentives will not be considered for (1) films that contradict the ethics and public order in the Republic of Serbia and (2) productions that compromise the reputation of the Republic of Serbia and / or promote human rights violations, hate speech or pornography.