Everything You Need to Know About the Proposed Lump Sum Taxation Regulations Updates

The National Alliance for Local and Economic Development (NALED) has proposed important changes to the state regarding lump sum taxation. More precisely, changes regarding adjusting the annual limit of 6 million dinars in accordance to type of business in question as well as the development of an automatized system for sending tax forms to suppress the subjectivity of assessments made by tax inspectors.

The submitted proposals regarding changes are aimed at fighting grey economy and are planned to be implemented by the end of the year.

Here are the 5 most important regulatory changes:

  1. Automatization of decisions on what group of entrepreneurs are entitled to lump sum taxation
  • All types of entrepreneurs and the codes associated with their type of business should be specified.
  • Developing a web application which would enable automatic checking of business types to see whether they are lump sum taxable and if they are; providing an automatic calculation of the amount payable.
  1. Adjusting the 6 million rsd limit in accordance to business type
  • Assessment of all the types of businesses which are entitled to lump sum taxation and determining if the 6 million rsd limit should be adjusted in accordance to business type.
  • Limiting entrepreneurs from receiving more than 80% of total business profits from one client, in this way preventing them from hiring other entrepreneurs to work for them.
  • Consider lowering the daily limit of 150.000 rsd cash withdrawals.
  1. Automatizing the issuing of lump sum taxation documentation to suppress the subjectivity of assessments made by tax inspectors
  • Adoption of average contributions and profits for the first six months of the previous year as a base for calculating lump sum tax.
  • Defining which business activity codes belong to which lump sum taxation group.
  • Consider revising whether all the existing elements for determining the tax base within the Regulation are necessary.
  • Enabling the automatized generation and delivery of tax forms via email.
  1. Creation of one account for lump sum taxation charges
  • Enabling the payment of taxable income and contributions to one account as opposed to four separate accounts.
  • Linking the Agency for Business Registry (APR) and the Tax Administration system and in this way improving communication between these two organizations regarding the exchange of documentation and ease of data entry.
  • Enabling electronic issuing of health and pension certificates by linking the state pension and health funds with APR.
  1. Tax relief for the first year of operation
  • Entrepreneurs (freelancers and mini-business owners) who earn up to 200 EUR per month should be relived from paying income and contributions taxes in their first year of operation until the amount is exceeded.

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