Last week we wrote about The Flat-rate Taxation of Entrepreneurs, and now we will write about self-taxation, other method of paying taxes by Entrepreneurs.
Entrepreneurs who realize turnover in the calendar year less than 6.000.000,00, or VAT turnover (pay attention: not every turnover is VAT turnover) in the last 365 days less than 8.000.000,00 dinars can be flat rate taxable.
They can be, but they do not have to.
In some situations, it is better to show business result through the books and pay the applicable taxes on the achieved result, and not to be flat rate taxated. For the purpose of selecting a more cost-effective option, a Calculator can also be used on our site – look under Entrepreneur tab.
Entrepreneurs who exceed the aforementioned limits (6.000.000,00 dinars per calendar year and 8.000.000,00 dinars of VAT turnover in the last 365 days) have no choice and certainly must keep their business books and be self-taxated and maybe enter into VAT system.
Unlike Entrepreneurs which are flat-rate taxated, self-tax Entrepreneurs are obligated to book costs and all other changes that are subject to accounting records in accordance with the Rulebook on Micro-Legal Entities (as of 01.01.2019 – simplified book-keeping is canceled).
At the end of the business year they submit financial statements and compile tax forms.
Even in self-taxation, there is one very important choice that refers to the possibility of paying personal earnings of Entrepreneurs or paying social contributions in relation to the achieved result at the end of the business year.
For us, the only logical choice is the payment of personal earnings for at least 2 clear reasons.
- If an Entrepreneur earns a profit at the end of the year (over a certain amount – currently cca 300.000,00 RSD), he will not pay 37.8% for social contributions (pension, health, unemployment) to that amount of profit.
- If in the procedure of extraordinary Tax control it is established that in one of the previous tax years there was a higher profit than it was shown, social contributions and interest for their non-disclosure and non-payment can not be charged by the Tax Administration.
Some Entrepreneurs, even despite these two reasons, for the alleged savings, which essentially do not exist, have not chosen the option of paying personal earnings, but we hope that they will change this in the future.
If you choose to pay your personal earnings, in the lowest possible amount, for which most Entrepreneurs have opted, you will pay about 9.000,00 dinars monthly on taxes and contributions to the personal earnings.
At the end of the year, you will pay 10% of the tax on the profit (the difference between revenues and expenses). If that profit is greater than cca 2.400.000,00 dinars, you will also become a taxpayer of annual income tax for citizens.
This means that you will (because you achieve high personal income in the Republic of Serbia) pay 10% of annual income tax for the profit over cca 2.400.000,00 dinars, up to cca 4.800.000,00 dinars, and over this amount of profit, you will pay 15% of annual income tax.
Together with this annual tax on citizens income, the highest possible tax for Entrepreneurs is 25% which consists of 10% of taxes at the end of the year (on business results) and additional annual income tax.
Hope this text was helpful.
If you need further tax advice and assistance, we are available.
Author: AKTIVA sistem