Tax Highlights - April 2022

ANNUAL PERSONAL INCOME TAX FOR THE YEAR 2021 – obligation for filing of tax return

On 12 April 2022 the Ministry of Finance has published on its website an Explanation regarding the annual personal income tax for 2021 (hereinafter: Explanation), which states, among other things, that there is an obligation to file a tax return if the annual sum of taxable income earned by the taxpayer in 2021 is higher than the prescribed non-taxable amount (RSD 3,268,224).

This means that the number of taxpayers who are required to file a tax return has significantly expanded, ie, that, contrary to current practice, a person who is not obliged to pay annual tax for 2021, is obliged to file a tax return, in case the annual sum of its taxable income, without reduction by tax and contributions paid at the expense of the recipient of income, is higher than RSD 3,268,224.

We note that the obligation in this case exists regardless of the age of the taxpayer, which is especially emphasized in the Explanation for persons who were under 40 years of age on 31 December 2021.

According to the above, the taxpayer determines whether he/she is obliged to file a tax return for annual tax by summation of the tax bases for all revenues subject to annual tax, and then compares that sum with the prescribed non-taxable amount of RSD 3,268,224. An obligation exists if the determined sum of bases is greater than the non-taxable amount, even if the tax liability for the annual tax is zero.

We consider that this interpretation of the Ministry of Finance will unnecessarily impose an additional administrative burden on both taxpayers and the Tax Administration, without a positive effect on state revenues.