Serbia to raise reduced VAT rate to 10% in crisis measures

Wed 9th Oct 2013

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.