State to borrow EUR 27.25 million for additional financing of tax administration modernization project

The state of Serbia will borrow EUR 27.25 million for the modernization of tax administration. Regarding this, the government has adopted a draft law confirming the Loan Agreement (Additional Financing of the Tax Administration Modernization Project) between Serbia and the International Bank for Reconstruction and Development, which was signed on August 6-7 this year.

The proposed development objective of the project, as stated, is to improve the efficiency of tax collection and reduce the burden of compliance for taxpayers.

As stated in the draft law, the semi-annual loan repayment will be on April 15 and October 15 of each year, and the maturity period is ten years, including a grace period of three years, with the principal repayable in equal installments, the first of which is due on October 15, 2028, and the last on April 15, 2035.

An access fee of 0.25% of the total principal amount is envisaged, as well as a fee on undrawn funds, also 0.25%.

The loan funds can be withdrawn four months after the project completion date, which is defined as April 30, 2028.

It is envisaged that the borrower, through the Tax Administration, should implement the project.

– The Tax Administration reform is one of the priority activities in the public sector reform, which is also confirmed in the key strategic documents adopted by the Government of Serbia. The Economic Reform Program for the period from 2024 to 2026, as part of the conditions for candidate countries for membership in the European Union, includes this undertaking as a key structural reform necessary for the successful implementation of the EU accession process. The Public Finance Management Reform Program for the period 2021-2025 includes a specific objective related to the efficient collection and management of budget funds and is mainly focused on the reform of tax administration, including the implementation of a ready-made commercial solution for an integrated tax management system. In addition, the improvement of tax administration will be aligned with the EU acquis under Chapter 16, which relates to taxation – the explanation of the bill states.

Vlada Republike Srbije

International Bank for Reconstruction and Development

Loan Agreement between Serbia and the International Bank for Reconstruction and Development

tax administration modernization