Serbian IT Association: Companies considering withdrawal from market due to revoked incentives

Several IT companies are considering a partial or full withdrawal from the Serbian market due to the revoked incentives, envisaged in the Regulation on the Criteria for the Allocation of Incentives to Employers which Employ Newly Relocated Individuals, the Serbian IT Association (SITA) announced.

– Four weeks after the cancellation of incentives for newly relocated individuals, and despite multiple official letters we have sent to the relevant institutions, a dialogue with the IT sector has yet to begin – the press release says.

The SITA, which brings together more than 20 technology companies with a total annual revenue exceeding EUR 375 million, of which over EUR 290 million comes from IT service exports, has expressed deep concern over the complete lack of institutional response.

As they say in their press release, despite their appeals and timely warnings about potential negative consequences, the authorities have offered neither an explanation for the decision nor proposals for solutions that would allow companies to adapt their operations. They add that, in the meantime, they are seeing tangible consequences - several IT companies are already considering a shift in strategic focus and partial or full withdrawal from the Serbian market.

The SITA reminds that the aforementioned Regulation played a key role over the past three years in positioning Serbia as an attractive destination for IT companies, particularly in the context of global relocations due to geopolitical instability. The incentives, the association points out, enabled Serbia to remain competitive with other countries actively attracting IT firms, such as Portugal, Turkey, the UAE, Romania, and others in the region.

According to analyses by the SITA, the revoked Regulation brought measurable benefits both for the state budget and the domestic economy.

– About two-thirds of all tax payments remained in the budget of the Republic of Serbia, while one-third constituted incentives for companies. The mechanism was not a fiscal expense but a tool for broadening the tax base and strengthening market competitiveness. In addition to direct revenues from income, profit, property, and VAT taxes, this incentive contributed to the employment of highly educated professionals, the growth of IT service exports, knowledge transfer, and the strengthening of domestic teams. It is important to emphasize that this is not the only tax mechanism impacting the sustainability of the IT industry in Serbia. A broader reflection on the tax framework for all IT companies, both domestic and foreign, is needed to ensure predictability, competitiveness, and long-term sector stability – the SITA points out.

The association urges the Government of the Republic of Serbia to immediately engage in dialogue with the industry and define a transitional solution. Otherwise, there is a risk of permanently undermining years of effort in attracting investment and developing the technological ecosystem, the SITA warns.

Srpska IT asocijacija

Serbian IT Association

SITA

withdrawal of IT companies from Serbian market

incentives for IT companies