The amendment to the Law on Illegal Business, which introduced the obligation for employers to pay a 15 percent tax on loans they give to related persons and family members, has begun to be applied.
The office of the director of the Revenue and Customs Administration (UPC), Vladimir Bulajić, informed that they expect significant revenues on this basis, as well as an end to the outflow of untaxed money from companies in this way.
At the end of February, the Assembly adopted amendments to the Law on Illegal Business and the Law on Profits of Legal Entities, which introduce the obligation to pay taxes on loans granted by companies. The only exception can be loans to employees in the amount of up to five thousand per year.
“Amendments to the Law on Illegal Business stipulate that a company and an entrepreneur cannot give loans to other companies, entrepreneurs, or individuals, if they do not pay their tax obligations in accordance with the law. The provisions of the law are being applied, and the UPC expects significant effects for the state budget, as well as preventing the outflow of tax-free money from companies, especially since the amendments to the Law on Corporate Income Tax, which deal with this area, have been introduced,” said the UPC.
The amendment to the law, as they explained, aims to introduce a ban, i.e. to expand the scope of business bans for taxpayers who have outstanding tax obligations, and who have so far made loans to other companies, individuals or entrepreneurs and thus avoided paying their tax obligations.
The UPC stated that these norms were adopted precisely for the purpose of protecting the state budget, by preventing the evasion of tax obligations by those who have so far made loans to other companies, entrepreneurs or individuals.
“Withholding tax is paid at the time of payment, and the taxpayer is obliged to submit a report on paid withholding tax to the competent tax authority by the end of February of the current year for the previous year. The form of the report was prescribed by the Ministry of Finance”, it was stated in the answers to questions about the application of these norms.
The Ministry of Finance previously announced that by applying the changes to these laws, situations that exist now will be avoided where the company owner borrows the company’s money to himself or family members, constantly extends the repayment terms, never pays taxes, and leaves the company in debt.
