Baner
Baner
Baner
Lump sum taxation
Content in English
Napisao Ljubiša Lazarević   
sreda, 20 april 2011 10:10

This article was originally written in 2008, and it is still valid.

Lump sum taxation is a term prescribed by the Individual Income Tax Law, in the part regulating the sole trader's (the entrepreneur's) income tax.

The entrepreneur who, given the circumstances, is not able to keep business books (apart from the sales book) or for whom bookkeeping interferes with carying out the activity, is entitled to file a request to pay sole trader`s income tax on a lump sum income (hereinafter: lump sum taxation).

 

The right to lump sum taxation cannot be acknowledged to the entrepreneur:

  1. who is the founder of a partnership;
  2. who performs his/her activity in the field of: wholetrade and retail trade, except for the maintenance and repair of motor vehicles, hotels and restaurants, financial mediation and real estate activities;
  3. in whose activity other persons invest;
  4. whose total turnover in the year prior to the one for which the tax is calculated, i.e. whose planned turnover when starting performing activities - is more than RSD 3,000,000;
  5. who is a VAT taxpayer, i.e. who decides to pay VAT pursuant to the VAT Law.

Furthermore, it is stated that the entrepreneur who performs his/her trading or catering activity in a kiosk, trailer or any other similar prefabricated or mobile unit, can be allowed, at his/her request, to pay the tax on a lump sum income, although his/her activities belong to the above-stated group.

Lump sum taxable income is actually a base on which contributions at the rate of 35.8% and tax at the rate of 10% are paid (45.8% in total). This base is determined by the tax inspector according to the Decree on detailed conditions, criteria and elements for lump sum taxation of sole trader`s income taxpayers.

Therefore, the founder of a trade files a lump sum taxation form to the tax inspector. The form contains the following:

  1. reasons for which the entrepreneur holds that he/she is not able to keep business books, i.e. how bookkeeping interferes with carrying out the activity;
  2. total turnover in the year prior to the one for which the tax is calculated, i.e. planned turnover when starting the activity;
  3. facts and circumstances relevant for determining the lump sum income: location and equipment in the store; number of workers and engaged members of the family; market conditions in which the activity is performed; surface area of the premises; entrepreneur`s age, his/her capacity for work, and other circumstances affecting profit generation.

Based on the data in this form and the above-mentioned Decree, the tax inspector determines a monthly lump sum income on which tax and contributions are paid.

Lump sum income is determined according to the following criteria and elements:

  1. average monthly salary per employee in the Republic, municipality, town and county, earned in the year prior to the one for which the lump sum income is determined;
  2. location of the store;
  3. equipment in the store;
  4. number of workers and engaged members of the family;
  5. market conditions in which the activity is performed;
  6. surface area of the premises;
  7. taxpayer`s age, his/her capacity for work,
  8. taxpayer income who performs the same or similar activity under the same or similar conditions;
  9. other circumstances affecting profit generation.

When determining lump sum income, the competent tax authority considers all liabilities, facts and data by which it came during control and otherwise.

 



 
Joomla templates by a4joomla