On Tuesday, December 9, Prime Minister Aleksandar Vučić and ministers Dušan Vujović and Kori Udovići had the opportunity to hear the views of members of the American Chamber of Commerce, as well as its guests - the Council of Foreign Investors (FIC), the Business Club "Privrednik" and the National Alliance for Local Economic Development (NALED) - about the current state of the economy in Serbia, as well as their suggestions for improving the business environment. At the same time, at the beginning of the meeting, a three-month survey conducted among AmCham members was presented, which concluded that increasing the predictability of tax policy and the consistent implementation of laws are the reforms that the economy expects from the Government of the Republic of Serbia in 2015, and it turned out that almost half of the respondents expects further investments and the creation of new jobs (more in detail in the Survey Results).
FIVE PILLARS OF REFORM: Speaking about the government's tax policy, Finance Minister Dušan Vujović was explicit - there will be no changes in excise policy, changes in VAT, and changes in corporate income tax in 2015. "There was always the dilemma of whether quick response was sometimes the enemy of quality." We made mistakes in the rush to change the law and now we have to go back and do it again. This time we start with strategy. The strategy is a three-year program that covers most of the expected mandate of the government. The fiscal strategy covers three years because that is the longest term that international financial organizations cover with their programs. We measured the reforms correctly and distributed them on four pillars, not only on expenditures, and we will implement them in three years, not in one, since that is not possible. In parallel with the reform of the expenditure side, we will also add the income side, which you often talk about, and which hurts you the most, since it is an integral part of the environment, but we have added two more essential pillars to it. One is the reform of the negative legacy of the past, companies undergoing restructuring and companies in the portfolio of the Privatization Agency, which for 10-15 years or more have not been able to find a solution to their problem, causing 600-800 million euros in annual costs for the budget. The fourth pillar is equally important and painful, which everyone pushed under the carpet, and that is the reform of public companies, which have more than 200.000 employees and consume enormous resources of this country. The fifth pillar, for which my colleague Cori Udovički is responsible, is the reform of public administration. What we achieved last week was the synchronization of what the IMF is doing and what the World Bank is doing. In parallel, the World Bank will create structural adjustment programs that will help the restructuring of EPS, Serbian Railways and some other large systems.
In this program, we did not foresee an increase in tax rates, but better tax collection, greater tax discipline, a higher level of voluntary tax payment, better and more efficient tax administration. We expect to be appointed to key functions of the Tax Administration, including the Director of the Tax Administration, as well as a change in the way the Tax Administration works. These measures that were implemented in recent months were ad hoc measures, but also quite effective measures from the point of view of income," Vujović said.
INSPECTION SUPERVISION AS A REQUIREMENT FOR LAW ENFORCEMENT: Commenting on the future Law on Inspection Supervision, the Minister of State Administration and Local Self-Government said that this is a key condition for good implementation of the law, as it introduces an instrument of supervision. "As much as the law on inspection supervision is important to you, the economy, in order to introduce order, consistency, coordination and to significantly reduce the space for the gray economy, believe me that it is even more important to us in the effort to reform the state administration." We forget that inspections also include budgetary and administrative inspections, and we need to be aware that when laws are passed, they should also be implemented, and in order to implement laws, you must have an instrument of supervision. Second, this law clearly requires officials not only to comply with regulations, but to think about the purpose of their work. And our goal is to promote growth in Serbia and to involve citizens in it. Civil servants cannot appear as an obstacle, but must be a means to that growth. There is a detailed plan, framework by-laws have been adopted that will be adopted together, or immediately after the adoption of the law. They are written to test the enforceability of laws, because some laws are not enforced because they are simply not enforceable. There is also political will at the top of the relevant ministries to implement the law. Resources are also provided to a good extent, I believe that we will succeed in strengthening the budgetary and administrative inspection even though we are in a period of fiscal consolidation, but in 2015 we will have to hold a donor conference for the IT equipment of the entire system, because it is expensive, and that's the only thing we don't have covered," said Udovicki.
PARAFISCAL TAXES: The president of the Serbian business club "Privrednik" Miodrag Kostić also raised the issue of parafiscal levies. Ramon Weidinger, vice president of NALED's Board of Directors and director of the Coca-Cola HBC company, speaking on this topic, presented the results of the research conducted by NALED in cooperation with USAID, which show that there are 384 non-tax benefits in Serbia, of which 247 are parafiscal impose. “These are payments where no service is provided in return,” Weidinger said, “or where the service provided is not commensurate with the amount of the fee. Compared to the 2012 register, 84 new parafiscal levies were added, nine of which were introduced recently. Also, 72 percent of these levies are under the jurisdiction of state authorities. Non-transparent and unpredictable introduction of new payments and increase of existing damages to responsible companies that operate in accordance with the law and pay all obligations and taxes. NALED proposed five steps to reduce parafiscal charges: eliminating the practice of multiple billing for the same service, adjusting the price of a service to the real cost price, eliminating payments for which no services are provided, returning funds that naturally belong to local authorities, and, perhaps most importantly measure, establishing a clear online register of fees, with the obligation that no institution can charge any fee, if it is not on the list of this register. As a consequence, companies would have a clear overview of their fiscal and parafiscal obligations, and the government would finally have these revenues under control," Weidinger concluded.
FINAL SETTLEMENT OF CONVERSION DELAYED: The meeting also discussed the new law on planning and construction, the text of which passed the Assembly. Dejan Trifunović, State Secretary of the Ministry of Construction, Transport and Infrastructure, said that this systemic law connects all levels of government, that 11 by-laws will enter into force in two weeks, and the other 24 acts from February 15, which will ensure the integral implementation of this of the law: "The key point of this law is something that will start from March 1, and that is the counters, one counter in all entities. Considering the number of municipalities and other entities, there will be around 200 of them and the investor will no longer visit more than 16 institutions already at the first hurdle, obtaining a location permit. It will have one counter, that system will have to function, we will have control mechanisms and there will be sanctions. That first part, which is no longer called the location permit, but "location conditions", will have a limit of 20 days, for the construction permit it will take three to five days, and then everything depends on the investor, how quickly he does the project, how quickly he reports and perform the works. From the first to the eleventh step, from the conceptual solution to the registration of the property, he will have only that one counter, and that is something that is crucial. 'One stop shop' is not something that is new for our municipalities and I think that with the teams on the ground, above all in the local self-governments that are critical for the implementation of these measures, we will be able to do it quickly. Another important date is January 1, 2016, when we want, with the help of partners, to implement electronic administration - electronic application and electronic issuance of construction permits, and this is something that will significantly move Serbia up the "Doing Business" ladder of the World Bank, Trifunović said. .
Commenting on the aforementioned Law on Planning and Construction, the President of the Foreign Investors Council (FIC) and the President of the Executive Board of Societe Generale Bank in Serbia, Frederik Kuen, congratulated the government on behalf of the investors for passing this reform law, which will simplify things and reduce the waiting time to 28 days. "If it happens, it will be a dream come true." And 'One stop shop' is a step in the right direction," Kuen said. "I don't want to be skeptical, but the key thing is the implementation - will it be exactly 28 days, will the administration be able to implement it, and I really can't wait to see the implementation early next year." Also, we still have some expectations, investors are like that. In the first place is the issue of conversion. We understand that it is a very difficult topic, but we also think that it is extremely important. This uncertainty regarding the final ownership of the land could, of course, deter investors from investing. I've read that it will be possible to get planning permission without this conversion, but I'm sorry to say that won't change things. As a banker I can tell you that it is not easy to finance construction when the property issue is not properly resolved, so conversion remains one of our expectations. Another thing is the local property tax. What our members see all too often, unfortunately, is that it is relatively unclear why there is a tax at all, why exactly the amount of the tax, and that often this amount of tax is not in accordance with the work done around a construction site, in terms of roads or access to it construction site. So, the idea is not only to reduce taxes, we from FIC often don't even ask for that, but to make things clear, predictable and understandable. But, to repeat, congratulations on passing this law," Kuen concluded.
At a panel organized by the American Chamber of Commerce (AmCham), the results of an extensive three-month survey among AmCham members on the business environment in Serbia were presented, and the speakers addressed, among other things, the current financial consolidation, the agreement with the IMF, the arrangement of the state administration, parafiscal levies and the new law on planning and construction
