Lump-sum taxpayers expect changes – Easier entrance to the market, lower taxes when starting a business

The changes to the system of taxation for lump-sum taxpayers, who include taxi drivers, hairdressers, lawyers and employees in the IT sector, will facilitate the entrance of new entrepreneurs to the market.

They will also be provided with lower taxes when starting a business, as well as the ability to enter the market without any consequence.

This was said on Tuesday, August 28, at the meeting of representatives IT sector and the NALED, and the organization has, among other things, prepared the Draft Amendment to the Taxation System, which the state might soon start considering.

NALED representative Dusan Vasiljevic points out that there are around 116,000 lump-sum taxpayers in Serbia and that they contribute more to the budget than the sectors outside the lump-sum payment system.

When it comes to the reform of the taxation system, Vasiljevic says, representatives of the IT sector mostly agree that lump-sum taxation should be automated and transparent.

He reminds that, at the moment, an entrepreneur doesn't know whether they will have lump-sum taxation approved for them before they start a business, but only afterward.

– Automation and transparency would contribute to them knowing whether they stand to be a part of the lump-sum taxation system before they start doing business, which should facilitate things for them and the tax administration – Vasiljevic emphasized.

He says that this will contribute to a quicker and easier founding of entrepreneurial businesses.

When it comes to lump-sum taxation, people think that it pertains to rich lawyers primarily, Vasiljevic says and adds that those under the lump-sum taxation system are mostly people who “have trouble making ends meet” and who don't know whether they will have enough money to pay the taxes.

Translation businesses, he adds, are a good example, as they earn about EUR 100 or 150 a month. He says that such entrepreneurs should not be burdened by taxes until they gain some foothold in the business. As the business grows, so do the taxes.

Startit representative Zoa Kukic says that the new draft features some positive effects, the most prominent of which is that it solves the main issue – the calculation of the amounts paid.

– It's good that the aim is for the formula used to calculate the lump-sum tax to be known – Kukic believes.

She adds, however, that the state should not tax the entrepreneurs who are only just starting, who practically have only one client, and that the state should include those who are not registered in the system, and not burdening those who are already a part of the system even more.

– This could lead to some IT experts leaving the business and working unregistered, which we wouldn't like to see happen – Kukic says.

Another problem, she points out, is that inspectors do not tax equally, so there have been examples, Kukic says, that two companies operating in the same town and having similar income pay different amounts of tax.

Milan Solaja, the director of the Vojvodina ICT Cluster, says that, by including the IT sector in the lump-sum payment system, the state has enabled the Serbian IT sector to become competitive in the global market.

– In Romania, there's zero tax on salaries in the IT sector. In Poland, large subsidies are provided for the export of their IT services, and here we have this system and I don't think it would be good to change it – Solaja believes.

He points out that “tectonic” changes might lead to larger costs, which, as he says, would make entrepreneurs go into the shadow economy or move abroad.

– This would reduce budget revenues – Solaja concludes.

NALED

PU Vojvođanski IKT klaster

NALED

Dusan Vasiljevic

Vojvodina ICT Cluster

change to the lump sum payment system

lump sum taxpayers

number of lump sum taxpayers in Serbia

Startit

Zoa Kukic

Milan Solaja

tax

tax payment

lump sum tax payment