Source: eKapija | Thursday, 06.06.2019.| 10:10
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Who is eligible for lump-sum tax payment? – New features introduced by reform of lump-sum taxation system

(Photo: Andrey_Popov/
According to the current regulations, all entrepreneurs unable to keep books due to justified circumstances are eligible for lump-sum tax payment. Several professions are also listed which can never be eligible for lump-sum tax payment, namely: accountancy, book-keeping and auditing jobs, tax advisory jobs, advertising and market research, wholesale and retail, hotels and restaurants, financial mediation and real estate-related activities and activities in which other parties make investments. Of course, an entrepreneur registered as taxpayer for VAT or an entrepreneur whose total sales in the year preceding the year for which the tax is defined exceed RSD 6,000 are not eligible for lump-sum tax payment either, Djerdj Pap, a member of Government of Serbia's Tax Force for upgrading lump-sum tax payment and the director of the company Fiskal Pro, says for eKapija.

– I believe it has to be said that it can hardly be justified today for some activities not to be eligible for lump-sum tax payment. What is the difference between attorney jobs (which are eligible) and jobs that aren't, for example, the job of a tax advisor, or for example, between public notaries (which are eligible) and auditing and accountancy jobs, which aren't. Other examples could be cited as well. It is obviously a dated regulation and I hope that it will be amended so as to make all taxpayers equal – Pap says.

According to available current data, there were 117,707 entrepreneurs who paid lump-sum tax in January 2019, with the most represented activities being taxi transport – 11,322, attorneys – 10,064, computer programming – 8,071, hairdressers and cosmetics salons – 6,964 and consultancy activities related to business operations and other management activities – 5,565.

Pap says that numerous flaws have been detected in the lump-sum tax payment system, with four of them being the most significant.

– It first needs to be said that, at the moment of registering the entrepreneurial activity, the entrepreneur doesn't know if they will be given the lump-sum tax payment status. The lack of a coherent system when it comes to decisions made by tax administrators in that sense is apparent, as the relevant regulations leave a lot of room for various interpretations. There's also the fact that, at the time they start carrying out the activity, the entrepreneur does not have any information about the amount of the total tax obligations that will be determined. This happens because tax inspectors are free to be independent in applying the criteria for determining the tax base. This often leads to considerable differences in the amounts of obligations for similar entrepreneurs in different municipalities – Pap said.

Djerdj Pap

He adds that one of the flaws is the tardiness in the issuing of tax bills, which are sometimes several months late.

– For example, this year, the issuing of tax bills in Novi Sad began in May and is expected to take until October. This problem is especially pronounced when it comes to new enterprises, which can't pay taxes until their tax bills are issued, which means that their debts often pile up. Also, due to the inability to pay health care contributions, they find it difficult to exercise their health insurance rights – Pap points out.

According to him, the fourth important flaw is that lump-sum taxpayers pay their obligations to four accounts (unlike employers, which pay wage-based obligations to one payment account). This unnecessarily complicates the payment procedure and increases the amount of paperwork.

– The aims of upgrading the lump-sum tax payment system are certainly to remove the said flaws for the sake of taxpayers, but also to reduce the workload of the Tax Administration. It should be said that, under the current regulations, the Tax Administration adopts and prints around 350,000 decisions on determining the tax obligations for lump-sum tax payment each year, which means that it has to deploy considerable resources for individualizing the tax obligation for each taxpayer and then send the bills to all those taxpayers, register them etc. – Pap emphasizes.

According to out interviewee, the systems needs to be and will be harmonized with modern e-government trends, utilizing process automation to the fullest extent when it comes to determining lump-sum tax amounts.

– The Task Force formed by the Government of Serbia is to propose an amendment to the current regulatory framework so as to achieve the maximum process automation. In other words, the aim is to enable, we hope by 2020, each taxpayer to check whether they can be a lump-sum taxpayer and what their obligations will be at the Tax Administration portal. Eventually, the portal should also be able to generate and send tax bills – Pap said.

The Task Force has not yet formulated the final propositions, but the reform aims to upgrade the current lump-sum tax payment system so as to be more modern and efficient, removing the said flaws, which affect both the taxpayers and the Tax Administration, in the process.


I. Milovanovic
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