Responses to the call of the Tax Administration: The self-employed ask for different tax rates

Regulate the situation of the self-employed by law The Association for the Protection of Constitutionality and Legality announced yesterday that after the announcement of the tax collection of the self-employed, which means that some will be deprived of up to 80 percent of income, they will ask that their status be legally regulated, to then determine a tax model that enables and stimulates entrepreneurs in this sector. “Nobody thinks that we should not pay taxes. But taxes should be based realistically. It is very important that we recognize the details of this community and understand that these are jobs and money that can easily leave Serbia, and with them probably people who are involved in these matters, “the statement said.

“Why would a freelancer who works for a salary of 800 euros with an employer abroad be exempt from tax, and I, as an employer who employs two or three people and pays the same number of workers, would be taxed?” Marko Mudrinic, founder of the Netokracija website. , which deals with the digital economy.

“It is high time that people, who usually work on the Internet, that is, workers in the digital economy, understand that not only can they sit in Serbia and work for some foreign companies, but that they are Serbian taxpayers and have to pay taxes here. “In most cases, the self-employed tax and contributions have to pay about 44 percent of their earnings. That’s a high tax, and if they have to pay for the last five years, most will probably give up that way because they realize it’s not worth it. “Mudrinić thinks, writes Politika.

Asked if they would do better if they registered commercial entities, he said that he did not advocate that the self-employed open companies, but explained that if they register a company in 2020, in the first three years they have a reduction of taxes and contributions by 70%. 65 and finally 60 percent. Your obligation in that case is to pay income tax.

“Around the world, the status of the self-employed is a little better regulated than in our country, because today the labor market and the digital economy offer more business models and commitment than 30 years ago when it was possible to work exclusively for an employer. in Serbia. “It won’t change on its own if we don’t have a citizens’ association to take care of it. It bothers me that the self-employed feel relaxed when it comes to the fact that they are citizens of Serbia who have first and foremost obligations here, “said his interlocutor.

It emphasizes that the Tax Administration has only recently had an advisory role. Until now, she was just a controller. But all those who work on the Internet should have been informed by a tax or accounting consultant about what is derived from the tax if they operate in accordance with that modality.

Mudrinić stresses that the self-employed status must be resolved and that their work must be introduced into legal channels, where they would have different tax rates, so that someone who earns 200 euros a month will be exempt from tax. Then some higher amounts are taxed at the second rate, and even more at the third rate. It is a progressive taxation. This requires a change in a whole range of laws.

An estimated 100,000 people in Serbia earn money this way. There is no precise number, because there is no association that brings them together and fights for their rights.

“Some were earning more than 2,500 euros a month, without paying a dinar of taxes. That is really wrong. If they worked and founded a company in the meantime, it is definitely an indication that they want to take their business to legal flows, and that is, Ultimately, the objective. “Tax administrations. But if they continue to do so, they are in serious crime. Technically, someone who sells contraband products in the market and someone who sits at home and works on the Internet for the state and the Tax Administration have the same status and operate in the gray zone, “Mudrinic said.

George Pap, a tax expert, claims that progressive taxation is a story for the future and is a matter of a country’s tax policy. We do not have progressive rates, except the annual income tax for citizens.

“It may make sense to introduce proportional rates, but now is not the time to say that you should provide another type of tax policy when the state requires taxes to be paid for something that has happened in the last five years. That progressive rates should be introduced, but that does not eliminate them. There are also good suggestions from people who are in some kind of trouble, one of the acceptable suggestions is not to pay taxes on the minimum amount of 100 to 200 euros, which is a good idea, but it is a story for the future. “And now we cannot talk about when there is income and a regulation that regulates what must be paid on that income,” explains Pap.

Asked how it is now, our interlocutor replied that there are two articles in the Personal Income Tax Law that regulate this matter.

“One is a tax on copyright and the other is a tax on other income. Both are taxed in the same way in the sense that the recipient of income from abroad is obliged to declare and calculate the tax himself. The rates are the same, but the deduction is different. The state recognizes a global deduction that ranges between 20 and 50 percent, if someone earns a thousand euros in income and has obtained it from some type of copyright, for example for a sculptural work, the deduction will be 50 percent, and if it is obtained from the creation of a database, which can also be considered an income similar to that of the author’s work, then that deduction is 34 percent, and if you earn under an employment contract, so the deduction is 20 percent, ”he says.

“The other thing that determines whether you pay lower or higher taxes is whether you are employed when you earn income. If you are, then you don’t pay for health insurance, and if you aren’t, you pay that too. Add sum if you look at net income, so that tax is 30 to a maximum of 80 percent (if you received it from abroad under a work contract and you are unemployed) ”, adds Pap.

Asked if the registration of economic entities is an alternative for the self-employed, he said that they can register different types of economic entities and legalize their activity.

“They do it as natural persons and the tax policy is like that, and when they register an activity, then depending on the type of activity they pay other taxes as a company. The question is why many did not register companies but generated income in this way. Probably the State he didn’t control them much. ” “It’s just that the state has seen a lot of money being made that way and wants to include taxes,” says Pap.