It’s Time to Pay the Ecotax – What is the Tax Rate for Your Company?

July 31, 2020 is the last day to file the ecotax return prescribed by the Government of the Republic of Serbia decree. As of April 18, 2020, it is possible to file the tax return electronically, but only for 2020, whereas the tax return for 2019 needs to be submitted in paper.

Zelena ekologija

* Note: Although the competent authorities initially stated that filing the return electronically will be possible only for 2020, taxpayers are still allowed to file a return for both 2020 and 2019 through the Local Tax Administration portal.

In addition, the Serbian Bar Association announced the initiative to assess the constitutionality and legality of the Decree. The Serbian Bar Association believes that charging an ecotax in their case would not be justified, bearing in mind that lawyers do not perform activities that have an impact on the environment. Therefore, in addition to the intervention before the Constitutional Court, the submission of a request to the Government of the Republic of Serbia to amend the Decree is also announced.

As a reminder, at the end of 2019, the Government had adopted the decree which introduced the new model of calculating and disbursing the specific encumbrance, the so-called ecological tax. According to the statements of the authorities, the collecting of this tax is directed to the formation of the environmental protection fund, which should reach the value of RSD 5 million a year.

Decree on the criteria for the determination of the activities affecting the environment according to the negative environmental impact level caused by the performance of the activities, amounts of the compensations (hereinafter: Decree) categorized all business entities into three groups. The main criteria for the allocation into one of the three existing categories is the amount of negative impact on the environment, which is caused by the performance of a taxpayer’s business activity. Thus, the tax will be determined in different amounts for the large, medium, small, micro-enterprises, and entrepreneurs, depending on the prevailing business activity they have registered.

The Decree itself, in the application as of January 1, 2020, makes the classification into categories simple, given that it contains an attachment – the list of all the business activities arranged in accordance with their environmental impact. Every business entity can easily calculate the amount of its tax obligation.

Here are a few examples of the activities classified into different categories under the Decree:

HOW HIGH IS THE ENVIRONMENTAL IMPACT OF THE COMPANY? WHAT IS THE SIZE OF THE COMPANY? WHAT IS THE PREVAILING BUSINESS ACTIVITY OF THE COMPANY?
High

  • Large entities: RSD 2 million
  • Medium entities: RSD 500,000
  • Small entities: RSD 200,000
  • Micro entities & entrepreneurs: RSD 20,000
  • mining,
  • wood processing industry,
  • textile industry,
  • chemical industry,
  • pharmaceutical industry,
  • energy, gas, and steam distribution
Medium

  • Large entities: RSD 1 million
  • Medium entities: RSD 250.000
  • Small entities: RSD 100.000
  • Micro entities & entrepreneurs: RSD 10,000
  • food industry,
  • tobacco industry,
  • machinery manufacture, construction,
  • accommodation and hospitality
Low

  • Large entities: RSD 500,000
  • Medium entities: RSD 125,000
  • Small entities: RSD 50,000
  • Micro entities & entrepreneurs: RSD 5,000
  • wholesale and retail,
  • financial activities,
  • professional, science, innovative and technical activities,
  • health and social care,
  • services,
  • real estate business

Regardless of the amounts prescribed by the Decree, the ecotax cannot go above the 0.4 percent of the annual income of the taxpayer for the previous year.

Before the new Decree has been adopted, only the biggest business entities and producers and importers of the goods which are classified as the special waste stream after they are used, were the taxpayers of the ecotax, and the amount of the tax was determined in a percent of the gross national income. Time has shown that such criteria might not be the most adequate one, given that sometimes SME can be even larger pollutants and the other way around, that the large enterprises do not always have a big impact on the environment. With that in mind, the Chamber of Commerce and Industry of Serbia has initiated this new method of ecotax remuneration by the principle ‘pay as you pollute’, grounded on calculating the tax amount in accordance with the actual amount of the pollution caused by a business entity.

Vetrenjače u prirodi

Although it was initially announced that the natural persons will be the taxpayers of the ecotax, with the obligation to pay RSD 100 a month, i.e. RSD 1,200 a year, this proposition has been withdrawn. Accordingly, the legal entities and entrepreneurs remain the subjects obliged to pay this tax. As the Government states, this system is adjusted to objectively determine the tax amount, as well as to contribute to the transparency of the business entities’ performances.

By adopting this regulative, the Republic of Serbia has expressed its attempt to reach the European Union standards, given that its main goal is to increase the financial assets for the environment protection. The only remaining question is how efficient the realization of the ecotax payments will be and how exactly will the assets be used.

The deadline for filing the ecotax return expires in just a couple of days – have you already determined in which category does your company fit?

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