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• Roundtable with representatives of the Ministry of Finance and Tax Administration (TA) (on topics such as: different interpretation of the tax laws between the MoF and the TA, delay in bylaws adoption, second-instance procedure etc.)
• Requirement of the TA to capitalize royalties’ expenses which do not satisfy requirement of IAS 38 (Intangible assets) – negative corporate income tax (cit) consequences and incorrect interpretation of the TA decisions by the Court
• Improvements of the CIT Law (e.g. marketing expenses limitations, rulebook for application of incentive for profits realized from production in free zones, WHT on swap expenses etc.)

• Advocacy against proliferation of earmarked revenues

• Value Added Tax Law amendments

Two major tax policy problems of the private sector found their place on the Tax Committee agenda for 2011: implementation of the Ministry of Finance (MoF) Opinions by the Tax Administration and implementation of the provisions on transfer pricing. On October 20^th, AmCham Steering Committee representatives met with Assistant Minister Nataša Kovačević and her associates to discuss these issues, along with several other topics related to Tax Committee activities.

Specifically, the haphazard enforcement by the Tax Administration of Opinions issued by the MoF creates legal uncertainty and obstacles to thework of companies operating in Serbia. Since the bulk of discrepancies of interpretations stem from the Value Added Tax Law (VAT), the Ministry informed AmCham that in their view, this can be solved only by amendments to theVAT Law, which would empower the Ministry to issue a Rulebook which would be mandatory and easily amendable for any exceptional cases needing additional explanation.

AmCham representatives also highlighted the need to provide for amendments to the Corporate Income Tax Law with regard to regulation of Transfer pricing in order to endow theTax Administration with more precise instructions for its implementation and in the interim to provide a Guideline based on OECD Guidelines. AmCham was informed that the Tax Administration is currently working on a Guideline which refers to the translation of the OECD Guidelines provided by the Serbian Fiscal Society and that it should soon be publicly available.

The Committee’s Agenda for 2010 was comprised of the following activities:

• Advocating for amendments to the VAT Law and related by-laws

• Advocating for improvement in the tax treatment of SWAP agreements

• Advocating against introduction of earmarked charges in non-fiscal regulations

Following the goals set in its 2010 Agenda, in August the Tax Committee sent comments and suggestions for improvement of the Value Added Tax Law to the Ministry of Finance. The key suggestion pertained to allowing registration for VAT without commercial presence in Serbia as well as for harmonization with EU regulations, which provide the place of recipient of service as a relevant position for treatment of services.In October, AmCham’s Tax and Finance Committees sent a letter to the Ministry of Finance suggesting improvements on the tax treatment of SWAP agreements. The letter warned against negative consequences stemming from the strict implementation of the Ministry of Finance’s opinion from October 2009, which could result in additional taxation, and advocates for thorough observance of the Corporate Income Tax Law provisions.In late September, Tax Committee representatives met with the Tax Policy IMF Mission. The meeting was an opportunity to focus on the most important challenges for our business community, including the proliferation of earmarked charges. The current situation, with more than 32 specific funds at the central level, renders the fiscal system less transparent for investors and less efficient in terms of prioritizing expenditures at the Government level. In addition, AmCham jointly with Foreign Investors Council advocated for removing Irrigation charge form the Law on Waters (successfully), and Forestry charge from the Law on Forests (without success). The letter also urged a dialogue with the Government on installing and observing procedures that would limit proliferation of earmarked charges in the long new regulations.

• On September 3, AmCham Tax Committee representatives, Chairman Igor Lončarević of KPMG and Zoran Skopljak of KN Law Office, and AmCham Executive Office representatives Bojana Ristić and Milica Stojanović, met with Nataša Kovačević, Assistant Minister in charge of the Fiscal System Department at the Ministry of Finance. The meeting came about as a result of an earlier AmCham initiative regarding the improvements of Corporate Income Tax Law provisions. Following the constructive discussion involving AmCham comments and suggestions, Ms. Kovačević stated that most of AmCham recommendations would be incorporated in the new Draft Law planned to be adopted in the fall together with the Budget for 2010. Afterwards, she invited AmCham representatives to a follow-up meeting as soon as the new Draft Law is completed, but before it is sent to the Government, so that we can talk over any further amendments.

• The Tax Committee devoted its efforts in 2008 to assisting the Government in fine-tuning legislation adopted in the previous years, focusing on three areas considered most important to the AmCham membership - Corporate Income Tax Law, VAT Law and Personal Income Tax Law.

• The Government adopted amendments to the Corporate Income Tax Law following a majority of the AmCham Tax Committee's suggestions, including deductibility of advertising expenses and allowing long-term reservation for severance payments.
• In November, the Tax Committee organized a Business Today Seminar on Double Taxation Treaties that attracted significant interest from the membership.

• The VAT Task Force was transformed into a formal Tax Committee;
• In June, the Parliament adopted amendments to the Personal Income Tax Law in line with AmCham recommendations, decreasing the effective burden on the average net salary by 10%.
• Tax Committee members took an active part in and made significant contributions to the first issue of AmCham Perspective, dedicated to the fiscal framework in Serbia;

• The VAT Law was amended with the incorporation of proposals prepared by the VAT Task-Force;
• In December, then Minister of Finance Mlađan Dinkić was guest speaker at an AmCham monthly business luncheon. He made specific reference to the productive cooperation between AmCham and his Ministry on VAT Law amendments and announced regular meetings between AmCham and his cabinet to expand their dialogue.