Profit or income tax is an additional tax on earnings or some profitable income. It is delivered no later than May 15 of the current year, for the realized earnings from the previous year. This tax is not mandatory for all persons who receive income. It is mandatory only for persons whose earnings exceed a certain non-taxable amount and is paid over that amount.
For the year 2018, the non-taxable amount is 2,375,136 dinars and is equal to triple the amount of the average annual salary per employee, which was paid in the Republic of Serbia in 2017. For amounts exceeding the limit, income is then taxed.
By definition, non-taxable income is triple the amount of average annual earnings per employee, paid in the Republic of Serbia. According to the data of the Republic Institute for Statistics, the average annual salary per employee in the Republic of Serbia, paid in 2017, is 791,712 dinars. Based on this, the non-taxable amount for 2017 is 2,375,136 dinars.
Taxpayers qualify for the personal income tax only when they earn income threefold higher than the average monthly salary of an employee in the current year. It takes into account the citizen’s salary, paid in the Republic of Serbia in the year for which the tax is determined. The main condition is that in the course of a calendar year, the income is greater than the triple amount of average annual earnings.
Annual tax on the income of citizens is paid by the following qualified taxpayers:
Residents are persons who reside in Serbia, as well as persons who perform their business activities within the territory of the Republic of Serbia. Residents are also persons who reside in our country for 183 days or more, for a period of 12 months.
Individuals who are going to work abroad become residents, but only if they fulfill certain conditions, in accordance with the Law. Otherwise, they do not become residents. Individuals who go abroad to work in a diplomatic or consular mission are residents.
A non-resident is an individual who earns income in the Republic of Serbia but does not fulfill the conditions for becoming a resident. He is obliged to file a tax return and pay a personal income tax.
Income that is taxable and whose total annual sum represents the total annual income are:
Consult your authorized bookkeeper about all the details and concerns about taxable income and tax.
Taxable income is the difference between the total annual collection of taxable income, deducted for taxes and contributions on the account of the income recipient, and the non-taxable amount. This means that total earnings are reduced by paid taxes and contributions, from which the non-taxable amount is deducted.
The tax base for the personal income tax can be reduced through individual deductions. That is, in fact, the difference between taxable income and deductions. Deductions to which a taxpayer is entitled may also be personal and deductions for dependent family members. Those are:
It is important to note that with deductions of family members there are some restrictions:
If two or more family members are taxpayers of annual income tax, only one taxpayer, or a member of the family who is supported, can deduct a deduction on this basis. Supported family members are persons who are supported by the taxpayer and they make the family community. Those are:
There are two rates of annual income tax, which are 10% and 15%. Up to the amount of 4,750,272 dinars tax is paid 10%, and over that amount, 15% is paid. This means the following:
If the Tax Administration fails to file a tax return for income tax, penalties may be monetary or result in imprisonment. The taxpayers can be punished if they fail to submit the application and pay taxes within the legal deadline, but also if they commit other offenses:
Annual tax on citizens’ income shall be reported to the competent Tax Administration, at the place of business and performance of the activity, no later than May 15 of the current year. The tax return is applied and submitted electronically or in paper form, on the prescribed tax return PPDG-2R. If submitted electronically, the taxpayer must have an electronic signature. If the tax return is completed in paper form, it must be signed. The tax return must be submitted to the Tax Administration personally, but the taxpayer may also authorize a tax proxy.