serbia taxOn 29 December 2017, the Government of Republic of Serbia proposed the law on ratifying multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting to the National Assembly. Adopting this will be a milestone in the implementation of BEPS regulation in Serbia.

BEPS regulation, published by OECD, is the most comprehensive and the most synchronized effort of governments of the world’s leading countries to stop tax planning which thrives on discrepancies between national tax jurisdictions, erodes tax base and artificially shifts profit to countries with lower tax rates. Although Serbia is not an OECD member, changes of tax regulation in following period on the basis of BEPS Action Plan can be expected.

Did Serbia sign the BEPS Multilateral Convention? 

In Paris in June of 2017, 76 countries and jurisdictions signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS, in order to implement BEPS regulation. This multilateral agreement, which was based on BEPS Action 15 ‘’Developing a Multilateral Instrument to Modify Bilateral’’, is the stepping stone in reforming international system of double tax treaties. Serbia was one of the countries which signed the multilateral convention in June of 2017 in Paris and it has already filed its reservations on the multilateral convention.

When is the implementation of BEPS regulation in Serbia expected? 

The implementation of BEPS regulation in Serbia has not been taken place yet. However, the milestone in this will be ratification of the multilateral convention by adopting the law on ratifying multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting, which was officially proposed by the Government of Republic of Serbia to the National Assembly of Republic of Serbia on the 29/12/2017.

Adopting this law will lead to changes in double tax treaties signed by Republic of Serbia and states which have already ratified the multilateral convention. After adoption of the proposed law, Serbia can also expect changes in the Law on Corporate Income Tax, especially in permanent establishment regulation, transfer pricing regulation and thin capitalization rules, in order to harmonise Serbian tax system with BEPS regulation. However, on the basis of available information, changes of Serbian legislation in order to be fully harmonised with BEPS Action Plan are not expected to be implemented before 2019.

If you would like to know more about the implementation of BEPS regulation in Serbia, please visit the homepage of WTS Serbia!

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