Source: Promo | Wednesday, 24.07.2019.| 14:15
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Tax incentives for investors and new Law on Alternative Investment Funds as basis for development of local SME sector

Illustration (Photo: Billion Photos/
The Task Force headed by representatives of the Ministry of Finance of the Republic of Serbia has prepared the draft Law on Alternative Investment Funds, which aims to harmonize the domestic legal framework with the matching EU directives, but also to enable a more efficient financing of micro, small and medium enterprises (SMEs) in Serbia.

SMEs are one of the driving engines of economic activities and growth in the Republic of Serbia, with a share of 50% in the total number of employees in the local economy. The financial position of SMEs is constantly improving and there is a positive trend of the growth of income and profitability, and consequently the capacity for their financing.

The financing of SMEs is currently available in Serbia primarily through the banking sector, whereas the Law on Alternative Investment Funds aims to raise the level of available financing through additional ownership capital.

The law is expected to be adopted by the end of 2019. In addition to being another formal step in the process of harmonization with EU regulations, the new law could be an important refreshment in the slowed down and inactive capital market.

Unlike traditional UCITS funds, which are primarily meant for smaller and non-professional investors, alternative investment funds are primarily meant for professional investors who have sufficient knowledge in the field of investments, which means that alternative funds cover more potential investments than UCITS funds.

Alternative funds invest in various types of property, primarily those less liquid, such as stakes in SMEs (mostly organized as limited liability companies), the technology sector, sustainable development projects, real estate etc.

In order for the new law to realize its full capacity in the process of implementation, the USAID project of cooperation for economic development is carrying out a survey in cooperation with the independent consulting company WM Equity Partners from Belgrade, to the end of giving recommendations to the Ministry of Finance of the Republic of Serbia in forming packages of tax incentives which would be available to investors at these funds, thereby raising the level of financing available to local SMEs.

Several proposed measures are currently being analyzed and considered, primarily measures of tax neutrality for these funds, in the sense of exempting alternative funds which have the status of legal entities from paying income tax for legal entities, implementing tax credits for investors based on investments in alternative funds, as well as the measure meant for the so-called business angels, that is, the measure of tax credits for annual personal income tax for citizens who invest in alternative funds or innovative local companies.

All interested participants in the market are invited to take part in the process of forming proposals for tax incentives through filling out an anonymous questionnaire available at

The estimated time needed to fill out the questionnaire is 5 minutes. No data gathered through this questionnaire will be publicly available and will be used only for the purpose of analysis within this USAID project. Participation is voluntary and all answers are confidential and will be considered personal opinions of the subjects of the survey.
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