Following the trend set by regional countries, the National Assembly of the Republic of Serbia adopted a new Law on Fiscalization. Its implementation shall start from January 1, 2022. Besides that, a number of bylaws that regulate the process of fiscalization in Serbia have also been adopted. The Tax Administration announced that they will publish a technical guide that will explain the obligations of retailers regarding the Law on Fiscalization.
The new Law on Fiscalization brings significant novelties in the procedure of issuing invoices and keeping a record of the turnover of goods and services, and introduces new terminology, which often causes confusion among retailers who have to regulate their business in accordance with the new law. Due to that, there are frequent questions when it comes to the meaning behind new terminology and obligations imposed by this law. So, let’s take a look at the major novelties, and answer some of the FAQs.
The first question which arises regarding the new Law on Fiscalization is what is fiscalization exactly?
To put it simply, fiscalization is a new manner of logging the turnover of goods and services in the turnover of retail trade, which is performed through special electronic fiscal devices. Fiscalization taxpayers shall issue a fiscal invoice at the moment of turnover through the electronic fiscal device, as well as to deliver the data regarding the issued invoice in real-time to the Tax Administration.
The matter of fiscalization is the turnover of goods and services in the retail trade. More precisely, the matter of fiscalization is the turnover of goods and services to natural persons at retail stores, irrespective of who is the customer/user, including the turnover made through self-checkout devices – payment machines.
The Law on Fiscalization does not define the manner in which turnover of retail goods and services can be performed, however, the answer to this question can be found in the Law on Trade. According to the Law on Trade, the turnover of retail goods and services can be performed as:
1) Retail at the retail spot (including retail store, portable retail stores, such as a kiosk, as well as movable assets and equipment);
2) In-person sales – by so-called traveling salesman (outside the retail spot, by simultaneous presence of the retailer and customer, and without the customer’s prior request for the offer); and
3) Remote selling (through webshops, e-commerce platforms, or drop shipping).
The Law on Fiscalization gives a broad definition of the taxpayers of fiscalization, stating that it is each taxpayer of tax on income acquired through a sole proprietorship, as well as every taxpayer of the tax on companies’ income, who perform retail turnover.
In other words, in this way, the scope of fiscalization is extended to all entrepreneurs and all companies that perform retail turnover (except if they are specifically excluded).
Since for technical and functional reasons in certain activities the implementation of the fiscalization procedure would be difficult or almost impossible, the Law on Fiscalization left the Government of the Republic of Serbia with the possibility to relieve certain activities of the obligation to carry out the fiscalization procedure.
Pursuant to the aforementioned, on April 1, 2021, the Government has adopted a Provision that gives an answer to the FAQ – who shall perform online fiscalization?
By this Provision, the number of businesses who do not have an obligation to record their turnover through fiscal devices pursuant to the current regulations has decreased. For those businesses that are not encompassed by the subject of the Provision, there will be an obligation to comply with the new rules. So, from January 1, 2022, hair and beauty salons, betting places, museums, sports centers, and many other businesses shall fiscalize their invoices.
The possibility to continue without using fiscal registers is left to taxi drivers, veterinarians, banks, insurance houses, attorneys, and others.
Keeping in mind the expansion of online retail in the last year, salesmen wondered whether the turnover made through electronic trade will have to be fiscalized. The answer to this is given by the same Provision. Namely, within the business activities regarding the turnover of retail goods and services, only two cases where there is no obligation of invoice fiscalization are foreseen:
(i) retail trade outside stores, counters, and markets, by traveling salesmen and street vendors, and
(ii) market sales of one’s agricultural products.
So, retail trade of goods and services which is performed in any other manner, including the retail via the internet, shall be subject to fiscalization, so retailers who sell their products or services via webshops will also have to fiscalize their invoices.
Before starting electronic fiscalization, the taxpayer is obliged to deliver data to the Tax Administration electronically, about their business space and the business premises where they shall use the electronic fiscal device, for each business premise and space separately.
Besides that, the retailer has to obtain electronic fiscal devices. When obtaining these devices, it is important to check whether they include software and processors approved by the Tax Administration.
The fiscalization procedure is performed by electronic fiscal devices, which shall replace fiscal registers that were used up till now. An electronic fiscal device is a hardware and/or software solution through which the fiscalization taxpayer issues an invoice and transfers data on the issued invoice to the Fiscalization Management System of the Tax Administration.
The retailers have two basic types of electronic fiscal devices at their disposal:
1) a device that uses its own processor of fiscal invoices, and which allows issuance of fiscal invoices even if the internet disconnects
2) a device that uses the processor of fiscal invoices in the fiscalization management System and which allows issuance of fiscal invoices only through an internet connection in real-time.
Depending on whether the taxpayer chooses one or the other, different rules in regards to the number of fiscal devices which they are obliged to obtain apply for taxpayers, and online sales shall be subject to certain exceptions.
Since it is not rare for the internet connection to get interrupted, one of the main concerns of retailers is what to do in case this happens. If the internet disconnects, all data on issued invoices are kept on the internal memory of the electronic fiscal device. The retailer is obliged to deliver the data to the Tax Administration immediately after establishing an internet connection, or within 5 days at the latest.
It is particularly important to state that the Law on Fiscalization introduces certain novelties when it comes to the content of fiscal invoices, which is why it is necessary that taxpayers coordinate their business with the said requirements.
It is clear that the Law on Fisclaization introduces a number of novelties in regard to the procedure of issuance of fiscal invoices. The Tax Administration expects that by introducing electronic fiscalization of invoices, they will be able to control taxpayers more efficiently and that the number of potential tax evasion attempts shall decrease. Also, the aim of the new regulations is to suppress the informal economy and a better tax collection. During the following year, it remains to be seen whether these expectations of the Tax Administration are justified, while the fiscalization taxpayers are left to comply their business with the new set of regulations by the end of 2021.