To converge faster towards the EU, more domestic investments are needed. Small and medium-sized enterprises in Serbia identify the return of tax credits as the most important thing the state can do for them. Nemanja Šormaz, Director of the Centre for Advanced Economic Studies (CEVES), in an interview for Bloomberg Adria points out that according to surveys conducted by the center, one in eight companies has invested more seriously in increasing and strengthening their capacities in the past three years.
„This further affects all those issues that often remain in the shadow of domestic investments, such as greening, digitalization, and innovations, which are key to competitiveness,“ says Šormaz.
How can the state encourage small and medium-sized enterprises?
One way the state can help small and medium-sized enterprises is through tax credits. „A tax credit is something that can be easily done and where the state can show goodwill to encourage domestic investments. Two-thirds of EU countries have tax credits. Serbia also has it, but Serbia is the only one that has it only for large companies,“ says Šormaz.
„We have created a model that assumes that 50 percent of profit tax would be protected, and that investments could be counted as a 50 percent deductible item for the tax base. In such a model, it is estimated that investments could increase by 40 percent in five years, which is about 1.5 billion euros. In 10 years, it would be 83 percent, which is almost three billion euros. These investments would permanently increase GDP by 0.4 percent in the medium term,“ states Šormaz.
And could EXPO 2027 also be an opportunity for small and medium-sized enterprises?
Šormaz believes it can. „Through EXPO 2027, the state can show that it is committed to small and medium-sized enterprises and domestic investments. Small and medium-sized enterprises produce everything necessary to make EXPO happen, from tunnels to studio lighting, hotel equipment, packaging, etc. This is not only an opportunity to support small and medium-sized enterprises through procurement and payment for products and services, but also to use the event to promote the products of small and medium-sized enterprises.“
