Consistent Implementation is the Key, Tax Committee President states
23. July 2012
Ivan Rakic, FIC Tax Committee President provided interview for Biznis Magazine and talked about problems in law implementation and its consequences, parafiscal charges, role of foreign investors, and other related topics.
He pointed out that inconsistency in application of tax regulations as well as tax authorities' wide discretionary rights in interpretation of laws are by far the most common objections of foreign investors related to Serbian tax system. He added that it is somewhat discouraging that the same objections have been repeating for several years, which leads to conclusion that not enough has been done to resolve identified issues in the previous period.
One of the roots which cause problems in implementation is that in some cases regulations do not keep up with changes in business activities, leaving some topics untapped. In that respect, by-laws which would cover specific tax topics would improve current situation (i.e. taxing of permanent establishments operating in Serbia).
Talking about the way to overcome differences between theory and practice, Rakic said that the way forward lays in joint collaboration of tax authorities and tax payers. According to Rakic, tax relation represents ''a two-way street'', and the role of taxpayers is to, as much as they can, point out to issues in application and to support the authorities in their overcoming them. That is a primary role of the FIC Taxation Committee - to point to the problems in practise and provide recommendations for their solving to the benefits of all participants.
Tax Committee President underlined that current foreign investors are the biggest promoters of Serbia, as they try expand their investments and business operations on the market. However, if in this process they also report to their headquarters on problems in law implementation, there are small chances that the new investments would be made.
Commenting about para-fiscal charges, Rakic noted that those charges shouldn't be looked at as an isolated issue and that their instant elimination would not be solution to the problem. The main problem is that a number of new duties are introduced in non-tax laws which should be stopped. From the predictability point of view, it is of utmost importance that those charges are being introduced through tax laws and to inform the private sector in a timely manner of those changes and thus allow them to adjust their business activities and plans. Serious approach to resolving this problem would include analysis of adequacy of each of those charges and putting those charges with economic rationale into efficient use within the system of public finances.Tax Committee President concluded the interview by highlighting the importance of timely announcement of regulatory changes, in order to enable the companies to adapt their business activities and plans. On the opposite, sudden changes in the middle of the business year, especially parafiscal introductions, are seen as very negative.