news 25 Dec 12

Cash-Strapped Serbia Slaps Taxes on Rich

As a part of its measures to combat the economic crisis and tax evasion, the goverment has introduced new taxes on people whose assets plainly do not match their incomes.

Jelisaveta Cirilovic

Starting January 15, Serbian citizens will have three months to report their property if it exceeds in value 35 million dinars (about 315,000 euro) to the Tax Administration office.

If their assets do not match their income, the tax office will impose a tax on the extra assets at a rate of 20 per cent.  The aim is to tax assets that not taxed before along with income gained without any evidence.

The measure comes after the government earlier this month adopted a new regulation on control of assets and income as measure to fight the economic crisis and tax evasion.

Economic analyst Goran Nikolic, from the Institute of European Studies, says the measure is not crucial in terms of filling the government budget, but sends a message to tax evaders.

 “Taxing the wealthy” was poorly implemented in the past in Serbia owing to technical difficulties and a lack of political will, explains economic analyst Sasa Radulovic.

Cross-checks were introduced to Serbian tax law in 2002 with a deadline for millionaires to register their assets of 2003. 

But there were few results as only a few rich people registered their assets and even fever were taxed.

In September, parliament adopted a budget for 2013 whose main objective is reducing the budget deficit.

The general rate of VAT among other things was increased from 18 to 20 per cent beginning October 1, 2012.  

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