Carrying Forward of Losses
The tax loss stated in the tax return can be carried forward and offset against future profits over a period of up to ten years. Accelerated Depreciation The taxpayer has the right to accelerated depreciation of fixed assets at rates of up to 25% above the prescribed ones. Intangible and fixed assets are divided into five groups, with amortization rates prescribed for each (Group I - 2.5%, II - 10%, III - 15%, IV - 20%, and V - 30%). A straight line depreciation method is prescribed for the first group, which includes real estate, while a declining balance method is valid for assets in the other groups.
Tax Exemptions for Concessions
A 5-year tax holiday is granted for concession-related investments, from the day the concession investment has been completed.
The amount of tax due can be reduced by 20% of the amount invested in fixed assets for the respective tax period. This reduction cannot exceed 50% of the total tax liability. A number of industries are entitled to receive a tax credit in the amount of 80% of investments made in purchasing fixed asses with their own financing up to the total amount of calculated Corporate Profits Tax the year in which the investment was made. If the company is registered as a small enterprise, a tax credit is also granted for fixed assets, in the amount of 40% of the investment made in the current year. The credit may not exceed 70% of the tax due.
A taxpayer who employs new workers is entitled to tax reduction for the amount equal to 100% of the gross salaries, increased by the related contribution paid by the employer. This tax credit is recognized for a period of two years from the day of employment of new workers, provided that the number of employees is not reduced during that period.
Enterprises are exempt from income tax for 10 years, starting from the first year in which they realize taxable income if:
• they invest in fixed assets an amount exceeding CSD 600 million (or approximately €8 million) and
• during the investment period they employ at least 100 additional employees for an indefinite period.