In March 2019 the Tax Administration of the Republic of Serbia published its 2019 Annual Tax Audit Plan. The plan, which describes the planned tax audits in Serbia this year, consists of the following parts:
- Planning method for tax audits in Serbia and available human resources
- Plan of tax audits in Serbia for 2019, based on risk analysis
- Tax audit plans in branch offices of Tax Administration,
- Audit plan on intellectual property rights for computer programs and databases
- Plan of tax audit activities performed in official premises of the Tax Administration
- Activities related to implementing the 2019 audit plan
- Analysis of the results and assessment of implementation of the plan of tax audits in Serbia in 2019
Below we primarily describe the planning method for tax audits in Serbia by identifying risky taxpayers.
Taxpayer risk analysis
Tax authorities in the Republic of Serbia have developed a risk analysis system for taxpayers through which they can identify suitable taxpayers for auditing. The databases (data from taxpayer register, tax returns, financial reports, information on cash withdrawals, data of previous controls, customs data, etc.) used to identify the risk level are constantly updated.
Some criteria for risk analysis include:
- Generated sales
- Number of employees
- Value of total assets
- Previous tax audits, their frequency and status
Based on monthly operational plans of the Central Control Sector of the Tax Administration it is primarily high-risk taxpayers that will be chosen. The level of risk is determined for all industries. Taxpayers from individual industries will be selected for audit during the preparation of the monthly operational plans, applying special risk criteria.
Selection of taxpayers for tax audits in Serbia in 2019
In 2019 the tax authorities will focus on the following taxpayers:
- Taxpayers whose founders are non-residents, with a special emphasis on their transactions with related parties and the application of double taxation treaties
- Taxpayers who make statutory changes, with a special emphasis on the VAT and corporate income tax aspects of asset transfers
- Taxpayers engaged in the trade of petroleum products, with a special emphasis on the accuracy of calculating and paying excise duties
The tax authorities will also audit the accuracy of VAT, excise duty, corporate income tax, income tax on self-employed activities and withholding tax obligations.
Special attention will be paid to taxpayers who report a tax credit that is longer than 12 months. (It means that tax authorities will more likely monitor taxpayers who claimed for certain type of tax credit, which would decrease the amount of tax paid in period longer than one year.) When choosing a taxpayer for a VAT audit, the data in the POPDV form will also be used.
Tax audits in Serbia will continue to be directed at suppressing the grey market as well as identifying the taxpayers who perform part of their activities in the grey zone by not recording all generated turnover and revenue in their business books. Audits of registering turnover with a cash register will be conducted at taxpayers who operate with large amounts of cash in circulation.
If you would like to know more about the plan of tax audits in Serbia in 2019 or other taxation or legal issues in the country, please visit the website of WTS Serbia.