Invester's Calculator – income tax deduction for investments (Serbia)
Content in English
Napisao Ljubiša Lazarević   
utorak, 24 april 2012 00:00

Calculator for calculating the tax credit for investments in property, plant, equipment or biological agents is primarily intended for investors. The calculator provides an accurate, clear and systematic review of the income tax deduction for those who make investment in their own fixed assets, and for performing the main activity and the activities recorded in the memorandum of association.

Article 48 of Income Tax Law enables business entities to reduce income tax liability on the grounds that they made certain investments in performing their activity.

The amount of the tax credit is different for small legal entities compared to medium and large legal entities. Small entities are entitled to a tax credit in the amount of 40% of the investment made, while medium and large entities are entitled to a tax credit in the amount of 20% of the investment.

It should be noted that on this basis is not possible to reduce completely the amount of income tax to be paid in the current year. The maximum tax credit that can be used in the year of the investment is 70% of the calculated income tax for small legal entities. For medium and large entities this amounts 50% of the calculated tax.

The unused amount of the tax credit can be transferred to the following years (under the same terms 70% and 50%), maximum to 10 years.

In the case when beside the tax credit from the current year, there is a tax credit from previous years, a tax credit for investments in the current year is applied first and then transferred tax credits in order of investments.

To be entitled to the tax credit certain conditions must be met:

  • The investment must be made in property, plant, equipment or biological agents (hereinafter referred to as: fixed assets) in your possession.
  • The investment must be made in the activity that is recorded in the memorandum of association or other act which sets out the activities that company performs (as the main activity or other activities performed by the company).
  • As fixed assets, in terms of recognition of tax credit, are not considered:
    • aircrafts and vessels that are not used for activity performing,
    • passenger cars, except cars for taxiing, rent-a-car, driver training and special passenger cars with a built-in appliances for people with disabilities,
    • furniture, except furniture for hotels, motels, restaurants and resorts for the young, children and workers,
    • carpets,
    • works of art and decorative items for interior spaces,
    • tools and inventory with the write-off.
  • Fixed assets for which the tax credit is used should not be disposed within 3 years, since in the case of disposal of these assets before the expiration of three-year period from the date of acquisition (except in case of statutory changes) company loses its right to tax credit and is liable to pay a tax which would have paid in case that did not use tax credit, indexed from the date of filing the tax return for the tax period in which was entitled to a tax credit to the date of disposal, at the growth rate of retail prices. In this case the company is obliged to report the disposal of fixed assets to the competent tax authority within five days from the date of disposal of these assets.
  • In case of disposal of fixed assets after the expiration of three-year period from the date of acquisition, the company has no right to further use of unused part of tax credit from the tax period in which disposal is made.
  • The right to a tax credit for investments in acquisition of equipment that has already been used in Serbia is not recognized.

A special convenience about the tax credit granted to encourage investments is given to the legal person who, according to the industry they mainly perform, into the following categories:

01 - agriculture;
05 - fishery;
17 - textile and fabric manufacture;
18 - clothing items manufacture, fur processing and colouring;
19 - leather and leather items processing and production;
27 - basic metals production;
28 - standard metal products production;
29 - machine and applience production;
30 - office machines and computer production;
31 - electrical machines and appliences production;
32 - radion, TV and communications equpment production;
33 - medical, precise and optical instruments production;
34 - motor vehicles, trailers and semi-trailers production;
35 - other transportation means production;
37 - recycling;
92 - group 9211 – cinematographic and video production.

Tax credits are granted to these economic associations for all of the industries above mentioned, which can be found in their respective Memorandum of Association, or more closely in the second act which determines the indutry.

The right to a tax credit is awarded to these companies in the amount of 80% of their investment, without any limitation to their yearly tax as calculated in the year of their investment. This also applies to the next 10 years, in which amount of time they may transfer any remaining unused tax credit.

This calculator does not encorporate the last mentioned case of tax credit calculation.

Invester's Calculator – income tax deduction for investments

Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year  10

Investment nr. 1

Investment nr. 2

Investment nr. 3

Total investments

Tax credit in the year of investment

Transfered tax credit

Income tax base

Income tax

Tax credit max.

Current tax credit and previuos tax credit sum

Real Tax Credit = less paid income tax

Tax Credit to transfer to nex years

Income tax to pay

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