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The Government of the Republic of Serbia

In the service of citizens

Deadline for income tax returns March 15

Belgrade, 22 February 2006

Head of the Serbian Tax Administration Vladimir Ilic said today that citizens whose annual net salary in 2005 exceeded 1.2 million dinars, as well as resident persons with more than 3.06 million dinars annual net salary are obliged to submit income tax returns before March 15.

Vladimir Ilic at today's press conference

Speaking at a press conference, Ilic said that residents are foreign private persons employed in domestic or foreign companies who have branches in Serbia, as well as Serbian citizens employed in branches of domestic companies abroad. He added that the tax rate for income tax return is 10%.

He explained that the tax base consists of taxable income, which is gross income minus personal exemptions, and added that personal exemptions form 40% of an average monthly salary in Serbia in 2005, plus 15% for every dependent in the household. According to Ilic, total exemptions cannot exceed 50% of the tax base.

Ilic recalled that penalty fees for submitting income tax returns after March 15 range from 5,000 to 50,000 and added that last year 8,882 income tax returns were submitted, with the tax base totaling 9.6 billion dinars. The Tax Administration processed 8,234 income tax returns and calculated a tax base of 8.7 billion dinars.

Ilic pointed out that as of this summer, a cross-assessment of the origin of citizens' assets at the rate of 20% will be applied and warned that income tax evasion will be a prosecutable offence, for which even a prison sentence could be pronounced.

He pointed out that there are illegal sources of income which the government is not informed about, such as 'under the table' transactions. Ilic also announced that this year, the Tax Administration will observe the increase of taxpayer assets and compare it with their declared income.

For example if someone declares €100,000 worth of income but increases their assets for lets say €1 million, it is obvious that they had €900,000 of undeclared income. This will be the tax basis for cross-assessment of the origin of assets, explained Ilic.

He said that the Tax Administration has a database with information on citizens' assets starting from January 1, 2003. All those who had assets valued at 20 million dinars (which was around €300,000 at the time) were under obligation to declare it.

For those who have done so there will be no problem, unlike the others, who will have a great deal of explaining to do once the cross-assessment of the origin of assets is applied, warned Ilic.