Two large IT corporations considering withdrawing from Serbian market due to abolition of incentives

Due to the abolition of incentives for the employment of newly settled persons, which mainly related to tax breaks for the engagement of highly qualified IT experts, some large corporations in this sector are considering moving their operations from Serbia to neighboring countries.

As confirmed to Biznis.rs by Marko Vucetic, director of the Serbian IT Association, which brings together more than 20 technology companies with a total annual turnover of more than 375 million euros, six of their members used the aforementioned tax breaks, and two corporations are considering withdrawing completely from the Serbian market.

He also says that the state owes companies a huge amount of money for these incentives and that neither the association nor the aforementioned companies have information about when the money will be paid to them.

– At the level of the Serbian IT Association, we have six companies that used these tax breaks for around 1,300-1,400 people. What is very important is that there is a huge debt for the period from 2023 to 2024, measured in millions of euros, which the state has not paid to our members based on the aforementioned benefits – says Vucetic, who did not specify the exact amount of the debt.

According to him, the Serbian IT Association does not know why there was a delay and when the money will be paid.

– There were indications that we would meet with state representatives in early July. It is now September and we are still waiting. In the meantime, we have received announcements from two companies that use the aforementioned tax benefits that they will withdraw from the Serbian market and this is a major problem that we are trying to solve. Without dialogue with the state, this is impossible - points out Vučetić.

Employing foreigners in the IT sector mainly pertains to Russian citizens, who have been numerous in Serbia since the beginning of the conflict in Ukraine. The source confirms that most of them are oriented towards the IT sector and that a large number of Russian experts are working on large and serious projects. However, he emphasizes that these state incentives are often misunderstood in our society.

– In this case, it is not about tax breaks for the arrival of Indian workers in the GSP and the like. This regulation created one key filter, which is an income of 300,000 dinars. Therefore, it mainly referred to highly qualified experts who can contribute to our country. The point was for us to attract the world’s largest corporations at a time when they were forced to withdraw a certain number of people from the market affected by a conflict. The state saw the situation, provided tax breaks and an incredibly large number of quality companies came to Serbia. That’s how we attracted IT corporations such as Dxc Luxoft, Epam, DataArt, JetBrains, Sperasoft... – says Vucetic.

As he explains, it is a mistake to associate these companies with the arrival of Russians and Ukrainians in Serbia because it is not Russian, but mainly American companies that came to our market and relocated a certain number of Russian and Ukrainian citizens.

Marko Vucetic states that companies within this association also use other tax breaks, but that the incentives for newly settled persons were crucial for them to come here.

– And then the state decided to just like that, without any announcements, abolish something that was promised until 2029, and there was an imbalance between promises and reality that companies assessed as an unpredictable environment for doing business. In such situations, most of them often make very radical decisions, such as withdrawing from the market – he adds.

The withdrawal of these companies, as Vucetic says, would entail a large number of layoffs - not only for foreign citizens, but also for domestic workers.

– On the other hand, if global corporations withdraw, Serbia will send a negative image of an unpredictable business environment and therefore some other companies will also think twice about coming to our country and whether they should stay in Serbia at all. Many of them are already considering markets in the region, such as Bulgaria, Romania, Poland – concludes Marko Vucetic, director of the Serbian IT Association.

Srpska IT asocijacija

Serbian IT Association

Marko Vučetić

abolition of incentives for employment of newly settled persons