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Regulation on Fiscal Benefits and Direct Assistance to Private Sector Businesses, and Financial Assistance to Citizens to Mitigate the Economic Impact of the COVID-19 Pandemic

In order to reduce the negative effects of the COVID–19 pandemic on the economy and its citizens, the Government of the Republic of Serbia has adopted the Program of Economic Measures to Support the Economy (the “Program”). The legal framework of the Program is defined in a number of regulations, the most important of which is the Regulation on Fiscal and Direct Assistance to Private Sector Businesses, and Financial Assistance to Citizens to Mitigate the Economic Impact of the COVID-19 Pandemic (the “Regulation”). After being co-signed by the President, the Government issued the Regulation on 10 April 2020; the Regulation was published on the same day in the Official Gazette of the Republic of Serbia with immediate effect.

The Regulation offers three basic sets of measures (i) fiscal benefits to businesses, (ii) direct assistance to businesses, and (iii) financial assistance to the citizens.

The fiscal benefits and direct assistance are intended for those businesses that are registered in the Republic of Serbia and are not recipients of public funding. The Regulation defines them as (i) resident legal persons, (ii) resident entrepreneurs (entrepreneurs; entrepreneurs that are subject to flat rate tax; agricultural entrepreneurs; and other entrepreneurs within the meaning of law governing personal income tax), and (iii) branches of foreign legal entities and representative office of foreign legal entities.

Article 3 of the Regulation sets the requirements that the businesses must meet to qualify for the fiscal benefits and direct assistance:

– they have not reduced the number of employees by more than 10%, not including fixed-term contract employees employed before 15 March 2020 for the period ending between 15 March 2020 and the effective date of the Regulation,

– they had been established and registered with the competent authority before 15 March 2020,

– also, the benefits of the Program may be used by entrepreneurs who have registered the suspension of their business activity – as of 15 March 2020.

The first set of measures concerns fiscal benefits for businesses and it deals mostly with the deferment of tax obligations that are to be repaid in interest-free 24 installments starting from 2021. Such a deferment has been put in plac