Amendments of the Law on Tax Procedure and Tax Administration in regard to filing of the tax declaration for founders/shareholders of companies
Author: Vojinović B. Milan, Attorney-at-Law, “VUK Tax Attorneys”
Date: 7th October 2021
On 7th October 2021, the Serbian National Assembly passed the Law on Amendments of the Law on Tax Procedure and Tax Administration (“Amendments of the LTPTA”). According to these amendments, amongst other, the Tax Administration will ex officio file the tax declaration PP OD-O on calculated social security contributions for founders/shareholders of the company, instead of the taxpayer or the person who is obliged to pay the tax (such as employer by way of withholding). Namely, Amendments of the LTPTA introduced the new Article of the LTPTA – 41b under the title “Tax declaration on calculated social security contributions for founders/shareholders of the company”, which defines that said tax declaration will be filed ex officio by the Tax Administration, if the taxpayer/person obliged for payment of tax fails to submit the tax declaration within the term defined by the Law on Mandatory Social Security Contributions. In the reasoning of the amendments of the LTPTA, it is stated that this amendment would enable filing of the tax declaration PP OD-O ex officio, in the same manner as it is regulated for filing the Individual tax declaration on calculated taxes and social security contributions ex officio, so that conditions for devising software for filing this tax declaration ex officio would be in place. Regardless of stated reasoning of the proposed amendments of the LTPTA, as well as the desire of the Ministry of Finance and the Tax Administration to efficiently regulate filing the tax declarations for founders and shareholders, and to prevent potential abuses, we believe that in this way, the state apparatus excessively interferes in the business operations and conduct of taxpayers, and it misuses the system of the state coercion and force, by applying new regulatory solutions. Namely, the taxpayers are obliged to know tax regulations and their legal duties, and they are aware of the existence of appropriate sanctions in case of untimely actions in accordance with the law. Therefore, this new regulatory solution is indeed questionable, and it is largely in conflict with basic principles of tax laws, regardless of the announced centralized digital systems. In addition, this new amendment of the LTPTA is in collision with current and valid provisions of the LTPTA. Namely, the Article 25, paragraph 1, point 2 of the LTPTA defines that the taxpayer is obliged to file a tax declaration to the Tax Administration on a prescribed form, within the deadline and in a manner defined by tax regulations. Further-on, the Article 38, paragraph 3 of the LTPTA defines that the taxpayer, tax proxy or another person authorized by the taxpayer to file a tax declaration, statutory representative and ex officio representative must sign the tax declaration, unless otherwise defined by tax regulations. Therefore, only the taxpayer or its authorized representative, are exclusively obliged to sign and file the tax declaration. Finally, tax declaration is taxpayer's report to the Tax Administration on revenues generated, expenses, profit earned, property, supply of goods and services and other transactions relevant for taxation. Therefore, it is quite dubious that the Tax Administration undertakes obligation to file comprehensive tax declaration for founders and shareholders of companies, as if the Tax Administration is a taxpayer by itself. By introducing the described mechanism, the additional obligations and liabilities are imposed to the Tax Administration’s employees as well, even though the Tax Administration has already been operating with limited capacities and it is not enabled to perform its basic duties and activities in a timely manner and in accordance with the law. Our Law Firm will monitor activities related to implementation of said amendments of the LTPTA, and will provide adequate tax and legal assistance to its clients in this regard.