One of the biggest problems that the Serbian economy is facing is illiquidity. Despite the years-long looking for a solution to this problem, no legal solution has yielded results so far. One gets the impression that the problem of illiquidity increases further, which is why economists advocate a change in tax policy.
The Tax Administration has recently released the latest list of tax debtors, according to which, companies owe 405 billion dinars in taxes and employee benefits. Of this amount, the largest portion relates to companies in bankruptcy or liquidation, owing the total of 237.5 billion dinars, and that amount cannot be collected. When it comes to companies whose debt is collectible, the biggest debtor is Kragujevac-based company Zastava Arms with 6.7 billion dinars, followed by Simpo from Vranje with 4.26 billion dinars, Krusik from Valjevo with 2.31 billion dinars, and PTT Namenska from Trstenik with 1.86 billion dinars. These are all state-owned enterprises, which means that there was a certain tolerance of the authorities in respect of payment deadlines. However, a private company, a cable operator SBB, is also among the top ten tax debtors whose debts exceed a billion dollars.
The issue of tax debtors is primarily the issue of functioning of the state bodies or the Tax Administration. The best example that something is amiss is the recent ad of the Tax Administration saying they are selling property seized from the Zekstra company, owned by Dragan Djuric, because of the tax debt of 2.1 million euros. Namely, the ad reads that the sale includes a 14-year old car Jugo, worth about 350 euros, as well as an old Ford and a Skoda, worth some 2,000 euros, while the expensive Mercedes was not confiscated and is not subject to sale. This way of debt collection will certainly not fill the state coffers.
Because there is no clear tax system , there are various anomalies in the functioning of the economy and local governments.
Last year the Law on Property was amended and it provides for a tax increase. In fact, business property tax is coupled with compensation for land usage. Local governments took advantage of this and raised taxes, so when the businessmen recently received bills, it was an unpleasant surprise. In some cities and municipalities, property taxes increased several times, with Belgrade holding a record, as the tax in some parts of the city is 36 times higher than last year, followed by Batocina, where the tax is now 22 times higher, and Novi Sad, Vranje, Leskovac, Zajecar and Pozarevac. Interestingly, Valjevo and Cacak have declared their entire cities the first city zone and increased the price per square meter up to 7 times. This means that tax on a downtown office and a warehouse on the outskirts are calculated on the same basis.
Economists and businessmen agree that taxes should be calculated based on the market value of the property because certain privileged company owners used to underestimate the value of the property and pay lower taxes, but the problem is that local governments have abused the tax changes in order to fill the municipal coffers. The Union of Employers demand immediate intervention of the state, because they warn that such high taxes could lead to the closing of hundreds of companies and around 30,000 workers may lose their jobs.
The true improvement of business environment calls for a comprehensive reform of the tax system, but it is perhaps even more important to ensure control of law implementation, as it has become the rule that vague legal regulations are interpreted in different ways and at the expense of the state because the state coffers see a drop in revenues every year.
Source Balkans
