Serbia to raise reduced VAT rate to 10% in crisis measures
Plans to raise the Serbian reduced VAT rate from 8% to 10% have been issued.
Serbia’s current standard VAT rate is 20%, following a 2% rise in October 2012. The reduced Value Added Tax rate applies to foodstuffs, medicines, agricultural goods, books and newspapers, public utilities and live events.
In addition, a number of other products will move from the reduced VAT rate of 8% to the standard rate of 20%. This may include hotel accommodation and IT services.
Economic troubles force VAT increase
The potential VAT rise is part of a package of stabilisation measures being introduced as Serbia looks to progress its EU membership talks. Serbia is hoping to borrow significantly from the UAE in emergency loans as it faces a liquidity crunch, and faces a 7% deficit. The aim is to reduce this to 2%. Serbia recently failed to secure funding from the IMF following a failure to cut spending and public sector wages.
The rise will come in on January 2014.