Although government officials vehemently deny claims that the state discriminates against domestic small investors, the situation in reality appears different. This is also claimed by Pavle Medić the Center for Higher Economic Studies (CEVES), which explains that direct support in the form of subsidies and indirect support through tax laws exclusively benefits large companies.
Pavle Medić tells Danas that institutional support for the domestic economy is very small, and therefore it should not be surprising that domestic private investments are twice as low as the European average.
He states that the state's attitude towards domestic and foreign investors can be viewed from two angles, and a clear difference is visible. „The Development Agency of Serbia (RAS) is primarily intended for foreign companies, when considering the funds allocated for their programs and disbursed. All funds disbursed through RAS and the Ministry of Economy, if divided between large, i.e., foreign and small investors, the ratio is about 70 to 30 in favor of large foreign investors. So, 70 percent of subsidies go to foreign investors, and 30 percent to domestic investors,“ explains Medić.
However, he adds, subsidies are not the end of the state aid package. „In the tax law, you also have tax exemptions granted to all companies investing over eight and a half million euros and employing 100 new people. And when you translate that into reality, we don't have a single domestic company that can commit to making such an investment and employing so many people. In other words, in the end, only large foreign companies can use this,“ says Medić.
He explains that it is not a problem for large, foreign companies to exceed that threshold, while that threshold is completely unattainable for small companies.
„Until 2013, Serbia had a tax credit, i.e., tax exemption for investments. This meant that a company that made a profit, if it decided to reinvest it, that reinvested profit was considered a credit for the purposes of profit taxation, but this was abolished and ceased to be valid from 2014,“ Medić reminds.
He also reminds that new EU member states, such as Slovakia, Hungary... have tax credits. „When comparing Serbia and the European Union (EU) countries, excluding Malta, Cyprus, and Luxembourg, which have specific tax laws, we are the only country that has tax exemptions only for large companies, and not for small ones, meaning we practically have them only for foreign, and not for domestic investors,“ states our interlocutor.
He explains that direct support in the form of subsidies and indirect support through tax laws benefit large companies, and in our country, besides state-owned and foreign ones, there are practically no large companies.
„Serbia does not have an agency that deals with small and medium-sized enterprises, which is another difference. RAS almost exclusively deals with large enterprises; they do a good job, as evidenced by the inflow of investments, however, it is a shame that Serbia does not have an agency that will deal with small and medium-sized enterprises,“ points out Medić.
On this issue, he compares Serbia and Ireland. „In their case, too, small and medium-sized enterprises are significantly less important than foreign and large corporations headquartered there, but they have an agency with 800 employees who deal with their domestic enterprises,“ says Medić.
Source: Danas.rs
