Lower Tax on New Workers and Increase of Non-Taxable Salary Components – Here’s What the Amendments to the Income Tax Law Bring

Instead of the current RSD 18,300, the employers will not pay tax on RSD 19,300 of employee wage, as proposed by the new amendments to the Income Tax Law. The amendments that the Government of Serbia adopted at the most recent session and forwarded to the National Assembly for deliberation, should, according to the explanation, contribute to the fight against the shadow economy and they propose an increase in the non-taxable salary components, inciting employment by implementing new tax exemptions for the employment of certain categories and an extension of the period of the implementation of the existing exemptions.

An increase in non-taxable salary components from RSD 18,300 to RSD 19,300 a month is proposed, which practically means that the principal amount of the wage tax is lowered and so is the amount of tax on that basis.

– This enables a lower fiscal burden on the income that natural persons realize based on their work, as well as a lowering of the operating costs for the employers – the explanation says.

The implementation of new exemptions for the employers based on the wages of new employees and for the employers based on the wages of the persons which are directly hired for the jobs of research and development is also proposed. Namely, the implementation of new exemptions for the employers in the form of being exempt from paying 70% of the calculated and withheld tax on the wage of a new employee, for wages paid until December 31, 2024, is proposed.

Furthermore, an exemption has been proposed for the employers who, within their activity in the territory of Serbia, carry our research and development, so that the employer has the right to being exempt from paying 70% of the calculated and withheld tax on the wage of a new employee directly hired for an R&D job, proportional to the time spent on R&D activities relative to the full working time.

An extension of the period of the implementation of the existing tax exemptions for new employments has also been proposed, in the form of the right to a recovery of a part of the tax paid on the basis of the salary of a new employee at a percentage of 65% to 75%, from December 31, 2021, to December 31, 2022.

Vlada Republike Srbije

Narodna skupština Republike Srbije

Income Tax Law

increase of non taxable wage components

exemptions for employers

exemption from tax payment for new employees

extension of period of implementation of existing tax exemptions

exemption from tax on capital income