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Serbia Mulls VAT Hike

by Ulrika Lomas, Tax-News.com, Brussels

22 August 2012


Serbian Deputy Prime Minister Rasim Ljajic has said the government is currently working on tax reform proposals, due to be unveiled in September.

As part of its commitment to reduce the budget deficit and to implement anti-crisis measures, Ljajic promised the reforms would make the tax system more progressive, by implementing tax hikes on wealthy taxpayers while protecting low-income taxpayers.

This move coincides with ongoing negotiations with the International Monetary Fund for international assistance against the economic crisis and the resulting budget deficit.

Under pressure from voters with respect to a possible value-added tax (VAT) hike from 18% to 20%, Ljajic said the government would decide in September if the VAT increase would take place, depending on whether alternative measures are available.

Popular pressure is particularly intense as regards the special VAT regime on foodstuffs, especially on bread which is a key food item for low-income Serbians. Ljajic confirmed that dialogue with bread makers was still ongoing but that he saw “no reasons for increasing the price of bread”.

TAGS: tax | value added tax (VAT) | budget | Serbia | food | tax reform

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