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The Government of the Republic of Serbia

In the service of citizens

New support measures for SMEs soon

Belgrade, 18 March 2012

Prime Minister Mirko Cvetkovic said in an interview for today's edition of daily "Vecernje Novosti" that the government will soon present a series of measures for encouraging small and medium-sized enterprises (SMEs) to produce more and hire more workers.

Author: novosti.rs

The official website of the Serbian government brings part of the interview.

On new measures:

- The government’s decision to rent land at the price lower than the market price or even cede it free of charge to all companies that open new plants and employ workers is just one in a series of measures that will soon be presented to the public and should encourage SMEs to produce more and, of course, employ more workers.

Since 2008 the government has provided, through international financial institutions and through the support of foreign governments, more than €300 million in extremely favourable credit lines intended exclusively for the SME sector.

Is there a trend of shutdown of craft shops and SMEs?

- In the last four years, 143, 469 SMEs were removed from the register, but at the same time 150, 272 new ones were set up, which means that their number actually rose by almost 7,000. Looking at the number of companies in the same period, 29, 635 were deleted from the register and 39, 200 set up, which is approximately 10,000 more new ones than those deleted.

The trend of dying out of craft shops in Serbia has lasted for more than 60 years and in the developed countries more than 100 years. It is unrealistic to expect that this trend will change. By the way, the craft shops have a much more favourable tax treatment than other entrepreneurs and companies, and the government provides significant incentives aimed at the preservation of traditional crafts.

On the reduction of income tax:

- The government completely abolished the payment of contributions for a period of one year for newly-employed workers up to 30 years of age and over 45, but this measure did not lead to increased employment. This shows that the problem is not in the amount of contributions and taxes which are, I must note, below the European average, being 38% of the gross salary. To remind you, the European average is 39 % of gross earnings. In addition, the new model of economic growth, which was adopted at the initiative of President Boris Tadic, a reform of the tax system is envisaged that will further reduce income contributions and taxes, which will improve the competitiveness of Serbian products in the international market.

Solution to the issue of insolvency and obligation of payment of taxes and contributions for all companies:

– The government adopted the law which provides for simultaneous payment of taxes and contributions with the payment of net salaries, which will start to be implemented as of June this year. I believe that this will improve competitiveness of companies on the market. As for the payment deadlines, the government adopted a decree that limits the deadline for payments of all republic and local bodies to 60 days, which formally eliminated the possibility for the state to be a generator of insolvency.

On the Development Bank:

– The government adopted the Law on the establishment of the Development Bank which will have a special department dealing exclusively with SMEs. With the establishment of the Development Bank, the Development Fund will be abolished, as well as start-up loans for beginners to which small enterprises had great objections.